Explore BrainMass

Explore BrainMass

    Short run, long run planning for sample company

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Output= 2000 unit
    Total Fixed Cost= $4000
    Price of Labor= $80
    price of Capital= $320
    Marginal Product of Labor= 20
    Marginal Product of Capital= 80
    Price of output= $8
    Long Run Marginal Cost= $8
    Average Product of labor= 40

    What Advice should be given for Short run and Long run and why? If output rises $10 dollar more what gonna happen in Short run and Long run ?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:59 pm ad1c9bdddf

    Solution Preview

    In the short run, the firm shuts down if the revenue it gets from producing is less than the variable cost of production.
    <br>Shut down if P &lt; AVC
    <br>Total Labor = Total Units/ APL = 2000/40 = 50
    <br>Total Cost of Labor = 80*$50 = $4000 (= TVC, because ...

    Solution Summary

    The expert analyzes the short run and long run planning for a sample company. The average product of labor is given.