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chomtong chomtong
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6 years ago
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, has hired you to give him some economic advice. He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts at an AVC of $15 and an ATC of $25. What would you recommend to him?
A) To continue to produce in the short run, even though he is earning a loss, and to expand in the future with the hope of increasing market share and total revenue.
B) To shut down in the short run, as he is incurring a loss, and to leave the industry in the long run, if there are no changes in economic conditions.
C) To continue producing in the short run, as his loss from production is less than his fixed costs, but to exit the industry in the long run if there are no changes in economic conditions.
D) You tell him you cannot make any recommendations until you know what his fixed costs are.
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DeToXiFYDeToXiFY
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6 years ago
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chomtong Author
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6 years ago
Good timing, thanks!
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This site is awesome
ofsuahasiufhoas
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Correct Slight Smile TY
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