Author Question: A shoe manufacturer is producing at a point where its marginal costs are 5 and its fixed costs are ... (Read 92 times)

gbarreiro · **on:** Jul 1, 2018

A shoe manufacturer is producing at a point where its marginal costs are 5 and its fixed costs are 5000 . At the current price of 10 it is producing 500 pairs. If the demand goes down, such that they can now only charge 8 per pair, should they continue production in the short run?
a. No because price has fallen
b. Yes because price is still higher than marginal costs
c. No because price is lower than average cost
d. Yes because price is higher than marginal costs

Question 2

If Bratty Brad decides not to hit Mousey Mike, what would Mousey Mike's best response be?
a. Tell
b. Not tell
c. Run
d. Hide