A firm sells 100 . units per week. It charges $15 per unit, the average variable costs are $10, and the average costs are $25 . The firm should
a. Shut-down as the firm is making a loss of $10,00 . per week
b. Shut-down as the firm cannot cover the fixed costs
c. Continue operating as the firm is covering all the variable costs and some of the fixed costs
d. Shut-down because it is cost effective to pay off the remaining fixed costs
c
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The costs associated with the user cost of capital include all of the following except
A) the real price of the capital good. B) the expected change in the marginal cost of capital based on expectations of the future. C) the real interest cost of borrowing to finance the purchase of the capital good. D) the depreciation costs associated with actually using the capital good.
If global warming began to cause random world-wide damage to crops, insurance companies
A) would insure against specific crop failures. B) would not insure against specific crop failures. C) would be indifferent between insuring or not. D) would find themselves facing prosecution for ignoring the problem for so long.