Answer: D. less than $4.50.
Explanation:
In the short run, a business should shutdown if the market price is below the Average Variable costs as because at this point, only losses are being made if the company stays in action.
If price is below the variable cost, it is best to shutdown so that the company can stop incurring the variable costs and incur the fixed cost alone. The lowest Average Variable cost is $4.50 for this good and so if the price falls below $4.50, the should shutdown.
Answer:
The lowest price the target's owners are willing to accept for the firm is 50
Explanation:
Solution
It is known that in the market there are two firms. while one is target, the other is equity firm.
The target has several projects at hand bu the firm's worth is uncertain. it lies anywhere between 0 and 100.
Now,
The equity believes that the target is not well managed and with a good management it's value can be increased by 50%
Now,
The owner of the target does not know the firm's worth. so, it may be profitable or the firm to accept the average outcome
Note: Kindly find an attached copy of the complete question for this example below.
Average outcome 0 + 100/2
= 100/2 = 50
Therefore, the lowest price the target's owners are willing to accept for the firm is 50
