Final answer:
An accurate calculation of revenue generated from mushroom production at $16 per pound cannot be provided without the quantity produced. The scenario given pertains to raspberries and demonstrates how a farm may choose to operate at a loss if the loss is still less than the fixed costs, provided that the price is above average variable cost.
Step-by-step explanation:
If the market price of mushrooms is $16 per pound and we assume that the production level and costs for mushrooms are the same as for raspberries described in the scenario, then calculating the revenue would require the quantity produced, which is not provided in the question. The scenario with raspberries showed us that if a farm operates at a loss, it might still prefer to stay open if the loss is smaller than the fixed costs that must be paid regardless of whether it operates.
However, without specific information on the quantity of mushrooms produced, the costs involved, or the price dynamics of mushrooms, we cannot accurately determine the revenue or if it will be profitable or result in a minimized loss compared to shutting down.
Example from Raspberries:
Using the provided example of raspberries, at $2.00 per pack, the farm produces 65 packs and incurs a loss of $47.45, which is less than the fixed cost of $62.00, making continued operation the loss-minimizing choice since the price is above average variable cost. If the price dropped to $1.50 per pack, resulting in total revenues of $90 and total costs of $165, the loss would be $75. Here it would be preferable to shut down, incurring only fixed costs of $62.00, since this is a smaller loss than operating at a price below average variable costs.