A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000.The fixed cost of production is $20,000.The price of each good is $10.Should the firm continue to produce in the short run?
A) No, it should shut down because it is making a loss.
B) Yes, it should continue to produce because its price exceeds its average fixed cost.
C) Yes, it should continue to produce because the firm's revenues cover the total variable cost of $16,000.
D) There is insufficient information to answer the question.
Correct Answer:
Verified
Q165: Ted's Pancake Kitchen suffers a short-run loss.When
Q166: Figure 12-9 Q167: Ben's Peanut Shoppe suffers a short-run loss.Ben Q168: If a firm shuts down in the Q169: If total revenue exceeds fixed cost, a Q171: If a firm shuts down, it Q172: In the short run, a firm that Q173: How are sunk costs and fixed costs Q174: Marty's Bird House suffers a short-run loss.Marty Q175: Figure 12-9
A)will suffer
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents