Practice5

5. [Shutdown Decision - Boutique Clothing] [14 points) Because of the pandemic. your unique- sized boutique clothing is deciding whether to keep your workers employed or whether to lay them off; You are In a long-term rental agreement with your landlord. The firm's current demand curve is $25 per article of clothing. Your prot maximizing quantity is 100 articles of clothing a week. This is a perfectly competitive market. a. [4 points] What is your marginal cost? ' ,/ b. [6 points] Your total variable costs are $1,500. Two questions: What is the maximum your rent can be for you to stay in business In the long run given current demand? What is the maximum your rent can be foryou to stay In business In the short run? 6. [4 points] Graph the firm's situation. Include the following curves: Demand, Marginal Cost, Average Variable Cost, Average Cost. Label Producer Surplus