Short answer

1.You've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is $100, and the price of the firm's output is $30. The cost of other variable inputs is $500 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is $30. Should the firm continue to operate at a loss? Carefully explain your answer. (2Pts)

2.A monopolist has demand and cost curves given by (2Pts)

QD= 10,000 - 20P

TC = 1,000 + 10Q + .05Q2

i.Find the monopolist's profit-maximizing quantity and price.

ii.Find the monopolist's profit.

3.Assume your firm is producing in the short run and your revenue can not cover your fixed costs. So, should you shutdown your firm? Yes or No? Why? (1Pt)

4.If a firm sets marginal revenue equal to marginal cost it will make an economic profit. Is the statement true or false? Why?(1Pt)