The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry. Our firm produces 10,000 guidebooks
for an average total cost of $38, marginal cost of $30, and average variable cost of $30. Our firm should:a) raise the price of guidebooks, because the firm is losing money.b) keep output the same, because the firm is producing at minimum average variable cost.c) shut down, because the firm is losing money.d) produce more guidebooks, because the next guidebook produced increases profit by $5.
d) produce more guidebooks, because the next guidebook produced increases profit by $5.
Explanation:
A perfectly competitive industry is characterised by many buyers and sellers of homogenous goods and services. There are no barriers to entry or exit of firms. In the long run, firms earn zero economic profit.
Profit is maximised where marginal revenue/ price is equal to marginal cost.
In this question, marginal revenue ($35) is greater than marginal cost ($30), so, the firm isn't maximising profit and they should increase production.
A firm should shutdown when average variable cost is greater than price.
Answer: Give short responses, as they are more effective.
i really wouldn't try to use any of these choices though. I would really like to get the audience's attention so I would answer there questions but I would also ask the audience what they think I should do to improve via presentation to the audience to peak their interest.
Explanation: None of these are really a good strategy for interacting with the audience in an effective way, but if this is the only thing provided for you, I would go for giving short responses.
Attraction of global market resulted in farmers shifting from traditional or mixed cropping to unsustainable cropping practices. The competition from cheaper imports pushed down the prices of crops like cotton, wheat etc making agriculture unsustainable for many farmers.
