A firm sells 1,000 units per week. Suppose the average variable cost is $20, and the average cost is $55.
In the short run, the break-even price is
. In the long run, the break-even price is
.
Suppose the firm charges a price of $5 per unit.
Use the following table to indicate whether the firm will shut down or continue to produce in the short run and the long run.
Time Continue to Produce Shut Down
Short Run
Long Run