Question

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 fallenb. Yes because price is still higher than marginal costsc. No because price is lower than average costd. Yes because price is higher than marginal costs

Answer 1

b. Yes because price is still higher than marginal costs

Step-by-step explanation: