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When price exceeds average variable cost but not average total cost the firm should in the short run?
Wiki User
∙ 10y ago
Minimize total losses by producing at the rate of output where ATC is minimized.
Wiki User
∙ 10y ago
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When should a company shut down in short run?
when price is less then average variable costs !
A perfect competition firm sells 15 units of output at the going market price of 10suppose it average fixed cost is 15 and its average variable cost is 8what is its contribution of fixed cost?
Selling price = 10 Variable cost = 8 Contribution = 2 per unit
Why do firms want to know their average total cost?
Average total cost determines how much profit or loss a firm will make at a certain output and price. It also determines is a firm should shut down, temporarily stopping production (not covering variable costs) but keeping the business (covering fixed costs), or if it should exit the market (not covering variable or fixed costs).
When aggregate supply exceeds aggregate demand what will happen to the price level?
The price will go down.
Is it true that In economics the price rise when demand exceeds supply?
Yes
When should a company shut down in short run?
when price is less then average variable costs !
What is the average price of the Jaguar XK cars in the US?
The average price of the Jaguar XK varies when one looks at all the options available. The lower end Jaguar start in price at $79,000 and go up to and exceeds the price of $174,000.
The difference between price and average variable cost is defined as?
Profit contribution
How do you calculate transfer pricing?
The transfer price should be equal to the variable costs of the goods or services, plus the contribution margin per unit that is lost. =variable costs+(selling price-variable costs)
Should a firm exit the market immediately if fixed cost is 20 and total revenue is 40 and variable cost is 50?
Firm should keep selling units at price which atleast cover the variable cost but if it is seems that it is not able to cover even the variable cost then it should immediately do something to either reduce variable cost or increase selling price.
Is price is independent variable or dependent variable?
dependent variable
A perfect competition firm sells 15 units of output at the going market price of 10suppose it average fixed cost is 15 and its average variable cost is 8what is its contribution of fixed cost?
Selling price = 10 Variable cost = 8 Contribution = 2 per unit
Why price an independable variable and demand is dependent variable?
Because demand creates the price, and not the price dictates the demand.
Why do firms want to know their average total cost?
Average total cost determines how much profit or loss a firm will make at a certain output and price. It also determines is a firm should shut down, temporarily stopping production (not covering variable costs) but keeping the business (covering fixed costs), or if it should exit the market (not covering variable or fixed costs).
What is the meaning of shutdown point?
The shutdown point is the output level at which total revenue is equal to the total variable cost. Here the product price is also equal to its average variable cost.
Do buyers know what the reserve price is at auctions?
The reserve price is hidden, unless a bid exceeds it.
When aggregate supply exceeds aggregate demand what will happen to the price level?
The price will go down.
