Assume that when the price is exactly equal to the average variable cost the fir
ID: 1180782 • Letter: A
Question
Assume that when the price is exactly equal to the average variable cost the firm is indifferent between producing zero units and the profit maximizing quantity. Also indicate for each price whether the firm will produce, shut down or be indifferent between the two in the short run and whether it will make a profit, suffer a loss or break even
Price -10 Quantity_____________(2,000, 0,either) produce or shut down or either ___________-profit/loss/even_________________
Price-15- quantity_____________(0, 4,000, either)produce or shut down or either _____________ profit/loss/even_____________
Price 25- quantity____________(6,000, 0,either)produce or shut down or either____________
Profit/loss/even______________
Price 35- quantity_____________(8,000,0, either) produce or shut down or either________
profit/loss/even______________
Price-50- quantity________________(10,000, 0,either)produce or shut down or either_________
Profit/loss/even_____________
Price-70-quantity____________________(12,000, 0, either)produce or shut down or either___________
Profit/loss/even
Price-90- quantity _______________(14,000, 0, either) produce or shut down or either_____________
Profit/loss/even____________________
COST (Dollars per lamp) QUANTITY (Thousands of lamps)Explanation / Answer
the answers are :
0 , shut down , loss
either , either , loss
6000 , produce , loss
8000 , produce , even
10000 , produce , profit
12000 , produce , profit
14000 , produce , profit