Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed (and sunk) cost. He mows 10 lawns a day. What can you say about Bob's short run decision regarding shut-down and his long-run decision regarding exit? Question 3 options: Bob should quit his business immediately Bob should stay in business in the short run as well as in the long run None of the other answers are correct Bob should stay in business in the short run but quit in the long run
Added by Elisa M.
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This means he is able to cover his variable costs and some of his fixed costs, so it is better for him to continue operating in the short run. Show more…
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Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for \$27 each. His total cost each day is \$280, of which \$30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short-run decision regarding shutdown and his long-run decision regarding exit?
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Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27$ each. His total cost each day is $280$, of which $30$ is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short-run decision regarding shutdown and his long-run decision regarding exit?
Majid B.
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