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Change the costs or output level


Please assist with the following problem.

A firm has fixed costs of $100,000. The selling price is $25 per unit of output. Average variable costs are lowest (equal to $20 per unit) at 1000 units of output.

Question 1: What advice would you give to this firm in the short run (without being able to change the costs or output level) relative to operating or shutting down and why?

Question 2: In the long run (without being able to change the costs or output level) relative to operating or shutting down and why?

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Microeconomics: Change the costs or output level
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