Suppose you are given the following data for Firm ABC, where you are the general manager Number
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Question:
Suppose you are given the following data for Firm ABC, where you are the general manager
Number of units sold26,000
Price per unit$20
Total variable costs$400,000
Total fixed costs$800,000
a)In the short-run, should your firm continue operating, shut down, or exit the industry?How do you know?
b)If 26,000 units is the profit maximizing level of output, does the firm's current priceper unit exceed the average variable cost?Calculate and show.
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