The lowest point on the average variable cost curve is called the shutdown point. So Winsome Widgets Marginal Revenue is at 60 no matter what output is at, so at output level 50 the MR=MC, and as the marginal decision rule applies at this point. f. Is Winsome Widgets in long-run equilibrium? Explain.
First consider the definition of long-run equilibrium:
All firms are maximizing profits.
No firm has incentive to enter or exit, because all firms are earning zero economic profit.
Price is such that QS = QD. (Output Supply equals Output In other terms that means in an Increasing Cost (time of an) Industry, an increase in input demand (anticipation of when people get greedy for something) by firms in the industry causes an increase in input prices (firms sale price to break even) and thereby an increase in average production costs. Also, at Long Run equilibrium, profits of all firms in the industry are zero and so no firms are entering or exiting the market. Therefore, Winsome Widgets is not at long run equilibrium because the latest (most current) output is 100. Output levels 40 through 59 would be considered in the state of Long Run equilibrium level. Everything before/after that range isn’t eligible for that.
Task 2: Given a numeric production schedule, you will calculate profit and make decisions about short-run profitability to answer questions relating to your calculations. Jerry’s Lock Shop is a perfectly competitive