Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per tote) (Totes) (Dollars) (Dollars) (Dollars) (Dollars) 10.00 44,000 16.00 44,000 40.00 44,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per tote
Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per tote) (Totes) (Dollars) (Dollars) (Dollars) (Dollars) 10.00 44,000 16.00 44,000 40.00 44,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per tote
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
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Quantity
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Total Revenue
|
Fixed Cost
|
Variable Cost
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Profit
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|---|---|---|---|---|---|
|
(Dollars per tote)
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(Totes)
|
(Dollars)
|
(Dollars)
|
(Dollars)
|
(Dollars)
|
| 10.00 |
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44,000 |
|
|
|
| 16.00 |
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44,000 |
|
|
|
| 40.00 |
|
44,000 |
|
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If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease).
This firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per tote.
Transcribed Image Text:PRICE (Dollars per tote)
40
36
32
28
24
20
16
12
8
MC
02
ATC
AVC
8 10 12 14
6
QUANTITY (Thousands of totes)
16
+
18
20
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