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.