Assume that the market price per kilogram of beet pulp is $0.3 and many relatively identical farms produce beets. The typical farm has a minimum average variable cost of $0.26 and a minimum average total cost of $0.31. Should it shut down given the current price? Why? Now assume that this farm's average variable and total costs increase by $0.06 for each level of output, while the other farms' costs remain the same as before. What should the farm do now? Why?

Assume that the market price per kilogram of beet pulp is $0.3 and many relatively identical farms produce beets. The typical farm has a minimum average variable cost of $0.26 and a minimum average total cost of $0.31. Should it shut down given the current price? Why? Now assume that this farm's average variable and total costs increase by $0.06 for each level of output, while the other farms' costs remain the same as before. What should the farm do now? Why?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section12.3: The Various Measures Of Cost

Problem 3QQ

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