A Firm's Optimal Output Is 1,000 Units Per Month,with a Fixed

question 261

Multiple Choice

A firm's optimal output is 1,000 units per month,with a fixed cost of $300 per month and variable cost of $200 per month.The market price of this good is $0.40.The firm decides to shut down.In such a situation,this firm should ________.

• A) down production in the short run
• B) not shut down production in the short run
• C) produce more than 1,000 units
• D) continue production for 1 month and then shut down

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Definitions:

Scotiabank

A leading Canadian multinational bank providing a wide range of banking and financial services globally.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains.

Borrowed

The act of receiving something with the intention to return it, often referring to money in financial contexts.

Matured

Used to describe financial instruments or investments that have reached their due date for payment or realization.