Question content area

Part $1$

Bob is a general contractor in the construction industry. Suppose the construction industry is perfectly competitive. In the short$$ run, assume the marginal cost of building new homes equals the market price of a new home when Bob builds $10$ new homes. At this level of$$ output, Bob's average fixed cost of building a new home is

$$$$120$ comma $000120,000$

and his average variable cost is

$$$$160$ comma $000160,000$

per home$($so his average total cost is

$$$$280$ comma $000280,000$

per$$ home$).$ If new homes are selling for

$$$$110$ comma $000110,000,$

should he continue to produce $10$ new homes in the short run or shut$$ down?

Part $2$

In the short$$ run, Bob should

$$

$$

produce

shut down

and lose

$$$enter your response here.

$($Enter your response as a whole$$ number.$)$