A shoe manufacturer is producing at a point where its marginal costs are $5 and its fixed costs are $5000 . At the current price of $10 it is producing 500 pairs. If the demand goes down, such that they can now only charge $8 per pair, should they continue production in the short run?
a. No because price has fallen
b. Yes because price is still higher than marginal costs
c. No because price is lower than average cost
d. Yes because price is higher than marginal costs
b
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A) screening B) monitoring C) a restrictive covenant D) a patent contract
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A. transaction costs are irrelevant. B. transaction costs have to be low. C. transaction costs have to be high. D. transaction costs have to be split evenly between all of the parties involved.