Microeconomics HELP PLEASE

Posted on 2014-03-31 10:54:00 in Economics by CHRISTINA MILITE

Microeconomics HELP PLEASE! I dont understand and cant figure out the answers... this is my homework assignment and i need help PLEASE

The following table shows the total output, total revenue, total variable cost, and total fixed cost of a firm. What level of output should the firm produce? Should it shut down? Should it exit the industry? Explain.



Output Total revenue Total variable cost Total fixed cost

1 $1,000 $1,500 $500

2 $2,000 $2,000 $500

3 $3,000 $2,600 $500

4 $4,000 $3,900 $500

5 $5,000 $5,000 $500



1.

This question is NOT in the same order as the one in the text.Do this one FIRST. Should this firm SHUT DOWN? You must both explain how to determine this as well as showing the use of this method with this data. So show specific details using this data.



2.

What level of output should this firm produce? (requires use of the profit max rule for perfect competition - that is Price = Marginal Revenue for this case)Hint: Must be able to calculate the Marginal Cost column from Total figuresAlso, must understand application of P= MC rule (alternative is the last place where P>MC)



3.

Should the firm leave the industry?

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