Westonci.ca is the best place to get answers to your questions, provided by a community of experienced and knowledgeable experts. Our platform provides a seamless experience for finding reliable answers from a knowledgeable network of professionals. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.
Sagot :
D) Incurring a loss per unit of $2, but should continue to operate in the short run, cost and revenue characteristics at its current level of output: price
The following information is given about the firm's revenue and costs at the current output (q) -
P = price = revenue from selling one unit = $10
AVC = average variable cost = $8
AFC = average fixed cost = $4
The firm's ATC(average total cost) = AVC + AFC = $8 + $4 = $12
Now, P is more than AVC but less than ATC. This means that the firm is incurring a loss but it should not shut down. This is because when P is more than AVC, it means that the firm is still able to recover some part of its total fixed costs(TFC) and the loss is less than TFC in the SR(short run).
So, the loss per unit is
= ATC - P
= $12 - $10
= $2
This loss per unit is lower than the TFC per unit (that is AFC = $4). If the firm decides to shut down at the current q then it will incur a per unit loss = AFC = $4.
assume a firm has the following cost and revenue characteristics at its current level of output: price?
Learn more revenue here:
https://brainly.com/question/8645356
#SPJ4
We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.
