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Firms' Short and Long-Run Decisions Practice Test
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Q1
Based on the firm’s cost and price information, should the firm produce or shut down in the short run? Assume the firm is a price taker in a perfectly competitive market and the market price is $P=\$40$ per unit.
At the profit-maximizing output, the firm has total revenue of $$400$, total variable cost of $\$420$, and total fixed cost of $$60$.
Based on the firm’s cost and price information, should the firm produce or shut down in the short run? Assume the firm is a price taker in a perfectly competitive market and the market price is $P=\$40$ per unit.
At the profit-maximizing output, the firm has total revenue of $$400$, total variable cost of $\$420$, and total fixed cost of $$60$.