Say you are the manager of a perfectly competitive firm sellinga product. Your business is making a loss because total revenue isless than total costs. What would you doshut down or continue tooperate? Use hypothetical numbers to explain. Information you needto provide includestate the product you are selling the price ofthe product the quantity of the product you produce fixed coststotal cost figure out total revenue total and average variablecosts. Then go ahead and make your decision. Explain carefully whyit makes better sense to shut down rather than continue to operateor to continue to operate rather than shut down as the case maybe. How do fixed costs play a role in your analysis? What is thedifference between shutting down and going out of business?

error: Content is protected !!