Independent of quantity produced

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Reference no: EM137509

Q1. "Total fixed cost or sunk cost is independent of quantity produced."

Assume a small firm has invested $10 million in total fixed cost also another $18 million in total variable cost. As the firm has started marketing its new product at a cost of $25.00 per unit; however, average variable cost of the product is $30.00. Should this firm shut down? Why or why not?

Q2. 1. Clarify why might the Homo sapiens production possibilities curve have shifted outward to right much more rapidly than persons of Neanderthals?

2. Why might failure to specialize Clarify why Neanderthal groups in difference areas did not trade? Remember that comparative advantage is the key basis for trade.

Reference no: EM137509

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