%3Cp%20class%3D%22MsoNormal%22%3E%3Cspan%20class%3D%22c1%22%3EThe%20Zebra%2C%20I

Question

%3Cp%20class%3D%22MsoNormal%22%3E%3Cspan%20class%3D%22c1%22%3EThe%20Zebra%2C%20Inc.%2C%20is%20selling%0Ain%20a%20purely%20competitive%20market.%20%20Its%20output%20is%20250%20units%2C%0Awhich%20sell%20for%20%242%20each.%26nbsp%3B%20At%20this%20level%20of%20output%2C%20marginal%0Acost%20is%20%242%20and%20average%20variable%20cost%20is%20%242.25.%26nbsp%3B%20What%20short-run%0Aproduction%20decision%20should%20this%20firm%20make%2C%20and%20what%20is%20their%0Aresulting%20profit%20or%20loss%3F%3C%2Fspan%3E%3C%2Fp%3E%0A

Explanation / Answer

ANS- IN THIS CASE FIRM IS UNABLE TO RECOVER EVEN ITS AVC. SO IN THIS CASE IT IS BETTER TO STOP THE PRODUCTION OF THE FIRM.

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