1.2

E) (0) @3330 1.2 1.3 Summary: Long-Run Costs and Output Decisions a incentive to increase its scale of operation in the long run. I). A rm suffering losses in the short run will continue to operate as long as total revenue at least covers xed cost. Megatron is a competitive firm operating under the following conditions: Price of output is $15, the prot-maximizing level of output is 40,000 units, and the total cost (full economic cost) of producing 40,000 units is $650,000. The rm's only fixed factor of production is a $750,000 stock of capital (a building). If the interest rate available on comparable risks is 8 percent, should this rm shut down immediately in the short run? Explain your answer. For cases A through F in the following table, would you (1) operate or shut down in the short run and (2) expand your plant or exit the GA