Asked by
Manoj Sutawane
on Nov 04, 2024
Verified
The Razor-Thin Disposable Razor Company is a perfectly competitive firm producing where MR = MC. The current market price of a disposable razor is $3.00. The firm sells 1,800 disposable razors. Its AVC is $2.00 and its AFC is $1.50. What should Razor-Thin do?
A) Continue to produce because price exceeds AVC.
B) Shut down and produce zero razors because price is less than ATC.
C) Decrease production so that AVC will decrease.
D) Increase production so that AFC will decrease.
Average Variable Cost
The total variable costs of production divided by the quantity of output produced.
Marginal Revenue
The additional revenue that a firm receives from selling one more unit of a good or service.
Average Fixed Cost
The fixed costs of production (costs that do not vary with output) divided by the quantity of output produced.
- Evaluate the outcomes of market price alterations on the profit-maximizing tactics of a company.
- Explore the utility of cost curves in guiding decisions on production volumes and the cessation of operations.
Verified Answer
DH
Learning Objectives
- Evaluate the outcomes of market price alterations on the profit-maximizing tactics of a company.
- Explore the utility of cost curves in guiding decisions on production volumes and the cessation of operations.