Suppose that the manager of a firm operating in a perfectly competitive market h

Question

Suppose that the manager of a firm operating in a perfectly competitive market has estimated the average variable cost function to be AVC = 4.0-00024Q + 0.00000602 Fixed costs are $500. 11. If the firm shuts down, how much profit (loss) will the firm earn? b. $943 a. zero c. $500 d. $57 e. none of the above 12. A monopolist will maximize profit by producing the level of output at which: a. the firm's total revenue exceeds total cost by the largest amount. b. marginal revenue equals marginal cost. c, the last unit of output produced adds the same amount to total revenue as to total . cost. d. both a and b e all of the above

Explanation / Answer

11. c. -$500.

(If a firm shuts down temporarily, it will incur loss equal to total fixed cost.)

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