Microeconomics Math Problem Example | Topics and Well Written Essays - 500 words

Microeconomics - Math Problem ExampleFor example, if the companion decides not to fly, it result still stimulate the fixed be as they argon not relate to the output. It will wholly save the variable costs. In this situation theres no revenue as firms planes are lying idle. In this situation the firm will still have to pay its insurance and incur depreciation incurring a red of $4000. However, if it flies between the two cities it makes a loss of only $2000. Hence, it is better for the company to fly between the two cities. However, if it keeps on making losses and they extend to the long-run, thusly it is better for the firm to shut-off its operations and invest its capital in an industry, where it could make a normal profit.b) At the product value of $28, the production will fall to 5 units. At his point the firm will be making a loss of = 140 - 175 = ($35). Despite the loss, the firm will delay to produce as it covering its variable costs.c) At the product price of $22, t here will be no production at all. Looking at the data, the firm will try to equate its price with MR and the resulting output according to this should be 2 units. However, the revenue gained from this will be only $44, whereas the average costs will be $75, as a result the firm will not produce at all as its revenue is less than average costs and it will only increase the loss if the firm decides to go with the production.S