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Consider a firm in each of the following three situations, and explain whether the firm will produce in the short run or shut down in the short run. In situation 1, the firm should A. produce 1,000 units of output and break even with a price of $10.00. OB. produce 1,000 units of output and have an economic profit of $1.00 per unit. OC. shut down since the price is less than the average variable cost. O D. produce 1,000 units of output at a loss since the price is less than the average total cost. In situation 2, the firm should A. produce 1,000 units of output and break even with a price of $10.00. B. produce 1,000 units of output and have an economic profit of $1.00 per unit. OC. produce 1,000 units of output at a loss since the price is less than the average total cost. OD. shut down since the price is less than the average variable cost. In situation 3, the firm should OA. produce 1,000 units of output at a loss since the price is less than the average total cost. OB. shut down since the price is less than the average variable cost. OC. produce 1,000 units of output and break even with a price of $10.00. OD. produce 1,000 units of output and have an economic profit of $1.00 per unit. Price Quantity Variable cost Fixed cost Marginal cost of 1,000th unit Situation 1 Situation 2 Situation 3 $10.00 $10.00 1,000 1,000 $5,000 $11,000 $10.00 1,000 $5,000 $5,000 $6,000 $5,000 $10.00 $10.00 $10.00

Consider a firm in each of the following three situations, and explain whether the firm will produce in the short run or shut down in the short run. In situation 1, the firm should A. produce 1,000 units of output and break even with a price of $10.00. OB. produce 1,000 units of output and have an economic profit of $1.00 per unit. OC. shut down since the price is less than the average variable cost. O D. produce 1,000 units of output at a loss since the price is less than the average total cost. In situation 2, the firm should A. produce 1,000 units of output and break even with a price of $10.00. B. produce 1,000 units of output and have an economic profit of $1.00 per unit. OC. produce 1,000 units of output at a loss since the price is less than the average total cost. OD. shut down since the price is less than the average variable cost. In situation 3, the firm should OA. produce 1,000 units of output at a loss since the price is less than the average total cost. OB. shut down since the price is less than the average variable cost. OC. produce 1,000 units of output and break even with a price of $10.00. OD. produce 1,000 units of output and have an economic profit of $1.00 per unit. Price Quantity Variable cost Fixed cost Marginal cost of 1,000th unit Situation 1 Situation 2 Situation 3 $10.00 $10.00 1,000 1,000 $5,000 $11,000 $10.00 1,000 $5,000 $5,000 $6,000 $5,000 $10.00 $10.00 $10.00

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 4CQQ
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Consider a firm in each of the following three situations, and explain whether the firm will produce in the short run or shut down in the short run. In situation 1, the firm should O A. produce 1,000 units of output and break even with a price of $10.00. O B. produce 1,000 units of output and have an economic profit of $1.00 per unit. O C. shut down since the price is less than the average variable cost. O D. produce 1,000 units of output at a loss since the price is less than the average total cost. In situation 2, the firm should O A. produce 1,000 units of output and break even with a price of $10.00. O B. produce 1,000 units of output and have an economic profit of $1.00 per unit. O C. produce 1,000 units of output at a loss since the price is less than the average total cost. O D. shut down since the price is less than the average variable cost. In situation 3, the firm should O A. produce 1,000 units of output at a loss since the price is less than the average total cost. O B. shut down since the price is less than the average variable cost. C. produce 1,000 units of output and break even with a price of $10.00. O D. produce 1,000 units of output and have an economic profit of $1.00 per unit. Price Quantity Variable cost Fixed cost Marginal cost of 1,000th unit Situation 1 Situation 2 $10.00 $10.00 1,000 1,000 $5,000 $5,000 $5,000 $6,000 $10.00 $10.00 Situation 3 $10.00 1,000 $11,000 $5,000 $10.00
Transcribed Image Text:Consider a firm in each of the following three situations, and explain whether the firm will produce in the short run or shut down in the short run. In situation 1, the firm should O A. produce 1,000 units of output and break even with a price of $10.00. O B. produce 1,000 units of output and have an economic profit of $1.00 per unit. O C. shut down since the price is less than the average variable cost. O D. produce 1,000 units of output at a loss since the price is less than the average total cost. In situation 2, the firm should O A. produce 1,000 units of output and break even with a price of $10.00. O B. produce 1,000 units of output and have an economic profit of $1.00 per unit. O C. produce 1,000 units of output at a loss since the price is less than the average total cost. O D. shut down since the price is less than the average variable cost. In situation 3, the firm should O A. produce 1,000 units of output at a loss since the price is less than the average total cost. O B. shut down since the price is less than the average variable cost. C. produce 1,000 units of output and break even with a price of $10.00. O D. produce 1,000 units of output and have an economic profit of $1.00 per unit. Price Quantity Variable cost Fixed cost Marginal cost of 1,000th unit Situation 1 Situation 2 $10.00 $10.00 1,000 1,000 $5,000 $5,000 $5,000 $6,000 $10.00 $10.00 Situation 3 $10.00 1,000 $11,000 $5,000 $10.00
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