d) What is level of output corresponding to the minimum level of Ron's average variable cost curve? [Hint: At the minimum level of the average variable cost curve, it crosses with the short-run marginal cost curve. Set AVC (q) = SMC(q) and solve for q] e) Find Ron's shutdown price. [Hint: The shutdown price when all fixed costs are sunk is given by the minimum level of the average variable cost curve. Plug the value of q you found in part (d) into the AVC(q). You have found the shutdown price for Ron] f) Find Ron's short-run supply curve. [Hint: Use the shutdown down price found in part (e). Ron's supplies the profit-maximizing quantity when price is equal or higher than the shutdown price, and zero otherwise]
d) What is level of output corresponding to the minimum level of Ron's average variable cost curve? [Hint: At the minimum level of the average variable cost curve, it crosses with the short-run marginal cost curve. Set AVC (q) = SMC(q) and solve for q] e) Find Ron's shutdown price. [Hint: The shutdown price when all fixed costs are sunk is given by the minimum level of the average variable cost curve. Plug the value of q you found in part (d) into the AVC(q). You have found the shutdown price for Ron] f) Find Ron's short-run supply curve. [Hint: Use the shutdown down price found in part (e). Ron's supplies the profit-maximizing quantity when price is equal or higher than the shutdown price, and zero otherwise]
Chapter22: Supply: The Costs Of Doing Business
Section: Chapter Questions
Problem 14E
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