Economists assume that the primary goal of a (for-profit) business is to make a profit. However,...
Economists assume that the primary goal of a (for-profit) business is to make a profit. However, we see some firms making a loss but still stay in business.
Why would a firm that incurs losses choose to operate rather than shut down?
Homework Answers
A firm does not shut down and decides to operate of it is able to cover the average variable cost, because if it able to do so then there is possibility of covering losses and earning economic profits in the long run.
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Economists assume that the primary goal of a (for-profit)
business is to make a profit. However,...
Economists assume that the primary goal of a (for-profit) business is to make a profit. However,...
Economists assume that the primary goal of a (for-profit) business is to make a profit. However, we see some firms making a loss but still stay in business. Why would a firm that incurs losses choose to operate rather than shut down?
Answer briefly the following questions (a) Why should a firm that incurs losses choose to produce rather than shut down?...
Answer briefly the following questions (a) Why should a firm that incurs losses choose to produce rather than shut down? (b) What happens to the short run supply when the fix cost increases?
economists normally assume that the goal of a typical business (firm) is to (x) sell as...
economists normally assume that the goal of a typical business (firm) is to (x) sell as much of their product as possible regardless of the level of profit. (y) set the price of their product as high as possible regardless of the level of profit. (z) maximize profit regardless of the price or quantity of sales. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (z) only Which...
29. At what price will the firm choose to shut down rather than stay in business?...
29. At what price will the firm choose to shut down rather than stay in business? a. $5 b. $6.75 c. $8.50 d. $13 30. In the long run, firms in a perfectly competitive industry a. Produce a level of output that is above allocative efficiency b. Produce where price is equal to average total cost c. Produce where fixed costs are maximized d. Can earn positive economic profit 31. If a firm in a perfectly competitive industry is currently...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is S20,000 per month. a) Should this firm produce or shut down in the short run? Explain. Should it stay in the industry or exit in the long run? Explain. b) Suppose instead that this business has a fixed cost of S35,000 per month. Should it produce or shut down in the short run? Explain. Should it stay in the industry or exit in the...
(a) Which of these women, if any, earned a profit? (b) Who should stay in business...
(a) Which of these women, if any, earned a profit?
(b) Who should stay in business in the short run?
(c) For which of these wineries, if any, is P > ATC? (Hint:
You don’t need to calculate any new numbers to answer this.) (ATC:
Average Total Cost, P: Price)
Please answer these questions by also providing explanations and
reasons why you answered the way you did it.
Paulette, Camille, and Hortense each own wineries in France. They produce inexpensive,...
Which of the following is true with respect to a perfectly competitive firm? It will make...
Which of the following is true with respect to a perfectly competitive firm? It will make small economic profits always or go out of business A perfectly competitive firm has a perfectly inelastic demand curve At profit maximization the perfectly competitive firm operates where total revenue is maximized as well The perfectly competitive firms supply curve is its marginal cost curve above AVC All of the above are true with respect to a perfectly competitive firm Question 5 1 pts...
Name 1. Describe a perfectly competitive market structure in terms of number of firms, ease of...
Name 1. Describe a perfectly competitive market structure in terms of number of firms, ease of entry a and product differentiation. 2. Draw the short-ran cost and revenue curves for a firm making an economic profit in a perfectly petitive industry. Show the firm's short-run supply curve. 3. Why might a firm continue to produce at a loss in the short na instead of shutting down? a perfectly competitive firm will make an economie profit in the short b. fP-...
Profit is a main goal in any business activity. To gain profit, i) total revenue, ii)...
Profit is a main goal in any business activity. To gain profit, i) total revenue, ii) total cost, and iii) number of demands, are some of the factors that might affect its value, as discussed in Chapter 2 of this course. There are some companies that offer their products / services for free to the customer, but still making a lot of profit from these products. These products are for example instant messaging applications such as WhatsApp, Telegram, or social...
Have you ever driven by a poorly maintained business facility and wondered why the owner does...
Have you ever driven by a poorly maintained business facility and wondered why the owner does not either fix up the property or go out of business? Consider the story of the Still There Motel on Old Highway North, Anytown, USA. Which of the following case(s) do you think might apply to this motel? Explain why. P > ATC making positive profit P = ATC making zero profit (Break-even point) P > AVC and P < ATC covering AVC and...
29. At what price will the firm choose to shut down rather than stay in business? a. $5 b. $6.75 c. $8.50 d. $13 30. In the long run, firms in a perfectly competitive industry a. Produce a level of output that is above allocative efficiency b. Produce where price is equal to average total cost c. Produce where fixed costs are maximized d. Can earn positive economic profit 31. If a firm in a perfectly competitive industry is currently...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is S20,000 per month. a) Should this firm produce or shut down in the short run? Explain. Should it stay in the industry or exit in the long run? Explain. b) Suppose instead that this business has a fixed cost of S35,000 per month. Should it produce or shut down in the short run? Explain. Should it stay in the industry or exit in the...
(a) Which of these women, if any, earned a profit?
(b) Who should stay in business in the short run?
(c) For which of these wineries, if any, is P > ATC? (Hint:
You don’t need to calculate any new numbers to answer this.) (ATC:
Average Total Cost, P: Price)
Please answer these questions by also providing explanations and
reasons why you answered the way you did it.
Paulette, Camille, and Hortense each own wineries in France. They produce inexpensive,...
Which of the following is true with respect to a perfectly competitive firm? It will make small economic profits always or go out of business A perfectly competitive firm has a perfectly inelastic demand curve At profit maximization the perfectly competitive firm operates where total revenue is maximized as well The perfectly competitive firms supply curve is its marginal cost curve above AVC All of the above are true with respect to a perfectly competitive firm Question 5 1 pts...
Name 1. Describe a perfectly competitive market structure in terms of number of firms, ease of entry a and product differentiation. 2. Draw the short-ran cost and revenue curves for a firm making an economic profit in a perfectly petitive industry. Show the firm's short-run supply curve. 3. Why might a firm continue to produce at a loss in the short na instead of shutting down? a perfectly competitive firm will make an economie profit in the short b. fP-...
Profit is a main goal in any business activity. To gain profit, i) total revenue, ii) total cost, and iii) number of demands, are some of the factors that might affect its value, as discussed in Chapter 2 of this course. There are some companies that offer their products / services for free to the customer, but still making a lot of profit from these products. These products are for example instant messaging applications such as WhatsApp, Telegram, or social...
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