A firm's sunk costs are $100,000 and its marginal costs are $250 per unit.It produces 500,000 units and prices it at $400 per unit. ,How low can price go before the firm decides to shut down?

Question

​A firm's sunk costs are $100,000 and its marginal costs are $250 per unit.It produces 500,000 units and prices it at $400 per unit. ,How low can price go before the firm decides to shut down?

Quizplus · Accepted Answer

The firm will decide to shut down if the price falls below its marginal costs, which are $250 per unit. At any price below this, the firm would not cover the cost of producing an additional unit, leading to losses on each unit produced.

​A Firm's Sunk Costs Are $100,000 and Its Marginal Costs

A Firm's Sunk Costs Are $100,000 and Its Marginal Costs