Asked by Shakia Balmer on Jul 29, 2024
Verified
A competitive firm currently produces and sells 800 units of output at a price of $10 per unit. The firm's fixed cost is $4,000 and its variable cost is $8,300. In the short run, should the firm continue to operate?
Fixed Cost
Fixed costs are business expenses that remain constant regardless of the levels of production or sales, such as rent, salaries, or loan payments.
Variable Cost
Costs that vary directly with the level of production or output.
Continue to Operate
The decision by a company or business to keep running its operations despite various challenges.
- Detail the process through which organizations in perfectly competitive settings ascertain their production and operational status.
- Assess and clarify the total financial return and profitability utilizing specific data on sales and costs for a business in a competitive sector.
Verified Answer
JD
jasmine doobayJul 30, 2024
Final Answer :
No, the firm should shut down, since the price of $10 falls short of average variable cost, which is $10.375.
Learning Objectives
- Detail the process through which organizations in perfectly competitive settings ascertain their production and operational status.
- Assess and clarify the total financial return and profitability utilizing specific data on sales and costs for a business in a competitive sector.
Related questions
When It Produces 500 Units of Output, a Firm Earns ...
Whenever Firms in a Perfectly Competitive Market Produce the Output ...
A Competitive Firm Is Maximizing Its Profit by Selling 150 ...
A Ski Resort Will Choose to Remain Open in the ...
A Competitive Firm Currently Produces and Sells 500 Units of ...