answer

watching

views

15 May 2019

A firm that has total fixed costs of $20,000 sells its output for $150 per unit and has an average variable cost of $200. If the firm's cost and revenue curves are linear, how much output must the firm produce to break even?

500

400

300

The firm cannot break even.

please show how you come up with the answer , do not just guess !!!

answer

watching

173

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Irving HeathcoteLv2

16 May 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

1. A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $60 per unit, what is the break-even amount of units for technology A?

a. 50

b. 100

c. 150

d. None - They would have to shut down

2. If the price is $20 per unit, what is the break-even amount of units for technology A?

a. 50

b. 60

c. 70

d. None - They have to shut down

3. In the short-run, a firm's decision to shut-down should not take into consideration

a. Avoidable cost

b. Variable cost

c. Fixed cost

d. Marginal cost

4. A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65. In the short run, the firm should

a. Shut-down as the firm is making a loss of $15,000 per week

b. Shut-down as the price is lower than the average cost

c. Continue operating as the firm is covering all the variable costs and some of the fixed costs

d. Shut-down because it is cost-effective to pay off the remaining fixed costs

indigorat718

Multiple choice qs on Perfect Competition - Qs College level 1 MIcreconomics

1. What is the correct interpretation of the perfectly competitive firm's supply curve?

It is the same as its average variable cost curve.

It is the same as its total variable cost curve.

It is the same as the portion of its marginal cost curve that lies above the average variable cost curve.

It is the same as the portion of its average variable cost curve that lies above the marginal cost curve.

2. What is the name of the type of market that is dominated by a few firms?

Oligopoly.

Monopolistic competition.

Monopoly.

Perfect competition.

---------------------------------------------------

3. What is break-even output?

The output at which the total revenue just covers a firm's total fixed cost.

The output at which the total revenue just covers a firm's total variable cost.

The output at which the total revenue just covers a firm's fixed and variable costs including normal profits.

The output at which the firm is making zero normal profits.

==================================================================

4. All of the following except one are considered to be the prerequisite elements for a market system to work effectively. Which is the exception?

Extensive specialization and trade.

Perfect competition.

Private ownership of productive resources.

A legal and social foundation

A balanced government budget

==========================================================

5. What is the term for the price at which the firm makes only normal profits?

Shutdown price.

Break-even price.

Average price.

Economic price.

================================================

6. Which of the following statements is true regarding the price in a perfectly competitive market?

Price equals average revenue but not marginal revenue.

Price equals marginal revenue but not average revenue.

Price is equal to neither the average nor the marginal revenue.

Price is equal to both the average and marginal revenue.

=================================================

7. What is the term for the extra revenue derived from the sale of one more unit?

Average revenue.

Marginal revenue.

Net revenue.

Total revenue.

=========================

8. What is the term for the amount of revenue that will always equal the price of the product in a perfectly-competitive market?

Marginal price.

Net revenue.

Average revenue.

Total revenue.

3. You've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is $100, and the price of the firm's output is $30. The cost of other variable inputs is $500 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is $30. Should the firm continue to operate at a loss? Explain your answer.