Question

​A firm sells 1000 units per week. It charges $15 per unit, the average variable costs...

​A firm sells 1000 units per week. It charges $15 per unit, the average variable costs are $10, and the average costs are $25. In the short run, the firm should

a.

​Shut-down as the firm is making a loss of $10,000 per week
b.

​Shut-down as price is lower than 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
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Answer #1

OPTION C

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