Econ 98-Chiu Costs of Production Worksheet Spring 2004Name & SID: Date:Willy Corporation makes zero economic profits; therefore it should shut-down its operations. Explain why the previous statement is misguided.The following is a cost schedule for Willy Corporation. The Willy Corporation produces high-quality textbooks. Calculate average total cost and marginal cost for the following cost schedule:Q FC VC TC ATC MC0 3 0 31 3 1 42 3 4 73 3 9 124 3 16 195 3 25 286 3 36 397 3 49 528 3 64 679 3 81 8410 3 100 103Sketch the ATC and MC below. Label your axes.Page 1 of 2Econ 98-Chiu Costs of Production Worksheet Spring 2004Name & SID: Date:Assume that the Willy Corporation is a price-taker which means this firm cannot affect themarket price. The market price for textbooks is $9. How many textbooks will the Willy Corporation produce? Does the firm face a profit or a loss? Calculate profit or loss.The market price is now $1. How many textbooks will the firm produce? Does the firm face a profit or a loss? Calculate profit or loss.At what price in the short-run will the firm decide to shut-down? An equation or general rule is acceptable; you do not need to calculate the price. (Hint: AVC)Page 2 of
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