Michael was discussing the importance of production analysis and cost analysis to managerial economics with a final year Open Campus student. The final year student, Catherine, stated that cost analysis is equally important. Michael disagrees. They agree to further discuss it after they have completed the Quiz.
Quiz: The accounting clerk for Open Campus Convenient Store provided with the following information regarding its costing: AVC = $8; and AC = $8
a) What is the AFC (average fixed cost)
b) Suppose the present price is $8, should the company shutdown? Explain!
Your Task: Please do the Quiz (with full explanation). After you have completed the quiz resume the discussion. Use real world examples to support your argument, which will display your understanding of the principles and concepts. There is no right or wrong answer if you justify your argument.