A firm's monthly revenue is $20,000, its variable cost is $15,000, and its fixed cost $8,000, of which $2,000is avoidable if it shuts down. The firm should Group of answer choices not shut down because itsrevenue is greater than its avoidable cost. shut down because its revenue is less than its avoidable cost.not shut down because its revenue is greater than its unavoidable cost. shut down because its revenue isless than its unavoidable cost.

Shutting down a firm refers to ceasing its operations and discontinuing its production or services…

Answered: A firm's monthly revenue is $20,000,…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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Describe a firm’s shutdown decision.
Total Revenue $5,000 per Week $2,600 per Week $2,400 per Week Total Variable Cost Total Fixed Cost Let us suppose Harry's, a local supplier of chill and pizza, has the revenue and cost structure shown here. Multiple Choice Harry's should stay open in the short run. Harry's should shut down in the long run. Harry's should shut down in the short run. Harry's should stay open in the short run but shut down in the long run.
The following table shows a profit-maximizing producer's marginal costs. The firm is operating in a perfectly competitive market and has fixed costs of $500. Marginal Cost ($) 200 Quantity 1 2 150 3 100 4 170 5 230 16 300 7 420 18 600 Refer to the above information to answer this question. What is the breakeven price?
A bakery sells pretzels. The fixed costs come to $8,750.00 per month. It will cost 35 cents to make each pretzel, and the bakery will charge $1.50 per pretzel. The bakery must sell 7,609 pretzels in a month to break even. The bakery's owners think they may not be able to sell that many pretzels. If they raise the price to $1.75, what will be the break-even point? Hint: use the Break-even point formula.
if the price is less than lowest average variable cost the firm will shut down
Discuss where does the shutdown being and why? What does the company has to do to get back to supernormal profit?
a branch office or business segment that shows negative operating income should be shut down do you agree explain briefly select one a no for example if the revenue that will be lost exceed the cost that will be saved it the branch or business segment should not be shut down shut it down will only increase the loss B yes if the branch or business segment shows negative operating income it should be shut down without considering other factors shutting down will stop a drain on the company resources
KidzPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. James, who owns and runs KidzPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume James has no fixed costs, and his cost of producing each portrait is $12. Customer Reservation Price ($ per photo) 1 50 2 46 3 42 4 38 5 34 6 30 7…
Conigan Box Company produces cardboard boxes that are sold in bundles of 1000 boxes. The market is highly competitive, with boxes currently selling for $100 per thousand. Conigan's total and marginal cost curves are:TC = 3,000,000 + 0.001Q2MC = 0.002Qwhere Q is measured in thousand box bundles per year. Calculate Conigan's profit maximizing quantity. Is the firm earning a profit?
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Central Grocery in New Orleans is famous for its muffaletta, a large round sandwich filled with deli meats and topped with a tangy olive salad. Suppose the following table represents cost and revenue data for Central Grocery. Muffaletta Sold per Day Price (P) Total Revenue (TR) Marginal Revenue (MR) Total Cost (TC) Marginal Cost (MC) Average Total Cost (ATC) Profit 0 $15 $12 1 14 18 2 13 20 3 12 21 4 11 23 5 10 26 6 9 30 7 8 35 8 7 42 9 6 52 10 5 78 Fill in the table What are the profit-maximizing price and quantity, and what…
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