For questions 4-6: A firm has weekly revenue of $1000. The firm's total cost is $1450...

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Answer 1

Answer #1

1) Solution: 400

Working: Revenue = 1000; Total cost = VC + FC = 1450

Firm shuts down when TR < VC

Thus firm will shut down when fixed costs are 400

2) Solution: False

Working: Revenue = 1000; VC = 900. Firm shuts down when TR < VC . Thus the statement is false

3) Solution: 80%

Working: Firm shuts down when TR < VC

Now Revenue = 1000; VC = 500; FC =800

Thus, 1000 < 500 + Avoidable FC

Avoidable FC = 500; % of avoidable FC should be more than 500/800 or 62.5%

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Answer 2

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