Final answer:
As a consultant, my recommendations vary based on MR, MC, and AVC. If MR exceeds MC, increase production; if MR is less than MC, cut production; if P is less than AVC, the firm should shut down to minimize losses.
Step-by-step explanation:
As a monopolist in various short-run scenarios, here are my recommendations for each case:
- a. MR = $2298; MC = $2348; AVC = $2288: Since MR < MC, you should cut production to decrease costs. The price can stay put as MR is above AVC, indicating that variable costs are covered.
- b. MR = $1148; MC = $198; AVC = $1138: Here, MR > MC, which means there is room to increase production for higher profits. Prices should stay put as long as MR continues to exceed MC.
- c. P = $3269; MC = $3319; AVC = $3289: With P < MC and P < AVC, it's best to shut down as the company cannot cover the variable costs, leading to minimized losses.
- d. MR = $4150; MC = $4100; AVC = $4140: Increase production since MR > MC. Keep the price steady as it's still above AVC but monitor closely as it's near AVC.
- e. MR = $5288; MC = $5338; AVC = $5278: Advise to reduce production to diminish costs. As MR is slightly above AVC, maintaining the current price can be considered.
Keep in mind, each recommendation is based on the principles that when MR = MC, firms are maximizing profits and, by not producing if P < AVC, they minimize losses in the short run by only incurring fixed costs.