Question

Suppose a firm faces the following costs:

Quantity	0	1	2	3	4	5	6	7	8
Total Cost	200	300	350	370	400	460	540	640	760

          

Which of the following prices is the lowest price at which a price-taking firm would decide to produce rather than shutdown?

Group of answer choices

a P = 60

b P = 100

c P = 20

d P = 80

e P = 40

Answer 1

Average quantity Total F C Variable cost haluable lest cast 200 200 2 Joo 300 200 2 350 150 170 3 370 loo 75.0 56.66 50.0 59.0 56.6 62.8 4 200 460 5 260 200 6 200 340 540 640 200 440 7 760 Joo 560 70.0 8 Because Bice seun Answeer is (a)=(60) an the shoot Run laking jism ring mimiune Loss is equal to AVC minimum AVC=$50 when price $50 Firm is less then shout down. So

quantity Total F C Variable cost Average haluable est cast 0 200 Joo 300 200 2 350 150 170 7510 56.66 3 370 4 200 460 5 260 200 59.0 56.6 69.8 6 200 340 540 640 200 7 440 760 Joo 560 70.0 8 the Answer is (a) (60) an shoot Run Bice taking firm from searing mimium equal Because Loss is to . AVC mirninum AVC= $50 when Price is less then $50 shout down. So
total cost - fixed cost= total variable cost.

Total variable cost/output= average veriable cost.

On zero output level cost is fixed cost.

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