ECO/365 — WEEK 3 QUIZ

 

ECO/365 — WEEK 3 QUIZ

 

(Please use some other color than black for your font.)

 

#1 Short Run Cost Structure of Joe’s Barbe$hop

 

Complete the cost structure on this page; then explain when a firm would produce (and at what level, with what consequence) and when it would shut down.  Assume a perfectly competitive market, the point of this exercise is to decide how much should Joe produce of barbering services when the market price is as the following questions propose.  (Use textbook jargon and explain the typical actions of the firm.)

 

FCVCTC

MC  

0

        

10 $          50.00         20 $          50.00         30 $          50.00         40 $          50.00         50 $          50.00         60 $          50.00         70 $          50.00         80 $          50.00         90 $          50.00         

 $          50.00         

Quantity	AFC	AVC	ATC
										$          50.00
100

 

 What quantity would be produced?  When would Joe shut down his barbe$hop?

 

A)   $1?  Why?

 

B)    $2? Why?

 

C)    $3? Why?

 

D)   $4? Why?