Should the firm shut down in the short run

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Reference no: EM131241762

Your company sells Beyonce concert DVDs. Total fixed costs for your operation are $10,000 a year. The variable costs are: 50Q – Q2 (Q is in hundreds) The firm pays $500 a year in various taxes. The market price of these DVDs is $40. Beyonce has many fans. Show your work/thought process:

a. Should the firm shut down in the short run? Explain.

b. If the firm’s fixed costs decreased from $10,000 to $8,000, would the firm shut down in the short run?

Reference no: EM131241762

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