You've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day
The daily wage (per worker) is $100, and the price of the firm's output is $30. The cost of other variable inputs is $500 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is $30. Should the firm continue to operate at a loss? Carefully explain your answer.
VC = $7,000 + 500. Thus AVC = 7500/300 = $25. Since P > AVC, the firm should continue to operate in the short run.
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What does the coefficient a in the new classical expression for short-run aggregate supply represent?
A) the full employment level of output B) the price level in the previous period C) how much output responds when the actual price level differs from the expected price level D) how much the price level responds when the actual level of output differs from the full employment level of output
Discouraged workers are
A) those who have given up looking for work, even though they would like to be employed. B) those who quit working because they are dissatisfied with their jobs. C) those unmotivated workers who bring down a country's productivity. D) those who would like to find a second job to supplement their income, but have not yet found one.