Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each....
Question:
Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short-run decision regarding shutdown and his long-run decision regarding exit?
Shut-Down Point:
A shut-down point is a level of output at which the firm is just making enough profit to cover its total variable cost. At any price below this level, it is not profitable for the firm to operate, and thus the firm decides to shut down its operations either temporarily or permanently.
Answer and Explanation: 1
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View this answerSuppose Bob provided lawn mowing services for $27 each. His total cost (TC) is $280, of which the fixed cost (FC) is $30. He mows ten lawns (Q) a day....
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Perfectly Competitive Market: Definition, Characteristics & Examples
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Chapter 3 / Lesson 63
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Learn the definition of perfect competition and understand how a perfectly competitive market works. Study the characteristics of a perfectly competitive market with examples.
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