Answered: 5) Why is a firm willing to produce at…

5) Why is a firm willing to produce at a loss in the short run if the loss is no greater than the fixed costs of the firm?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 29RQ: Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?

See similar textbooks

Related questions

Q: Derive the output elasticity of labour for the following further alternative production function:…

A: Output elasticity measures a percentage change in output due to percentage change in inputs. Whereas…

Q: You own a bakery shop. One of your customers places an order for 12 cupcakes. You plan to charge the…

A: Marginal revenue is the change in total revenue from the sale of an additional unit. Marginal cost…

Q: 5. Imagine an economy with v = 1/5. Inflation expectations are zero. The economy receives a cost…

A: Answer - "Thank you for submitting the questions.But, we are authorized to solve one question at a…

Q: Clothing R 30 Food Entertainment 2021 Price R 125 R5 2021 Quantity 45 15 8. 2022 Price R 140 R 45 R8…

A: Formulas: 1. CPI = (Cost of basket of goods in current year / Cost of basket of goods in base year)…

Q: Perfectly compotitive businesses are likely to try to create new products or figure out cost-saving…

A: A perfectly competitive firm faces a high degree of competition due to the presence of many sellers…

Q: Discuss two cases of price elasticity of demand. Use diagrams to motivate your answer

A: The price elasticity of demand is defined as the percentage change in quantity demanded divided by…

Q: After 2008, the Fed sets a target range that is for the federal funds rate. Select one: O 1…

A: The federal funds rate is the target interest rate which the Federal Reserve sets for the commercial…

Q: sing the double declining balance depreciation method for an asset purchased at the start of 1019…

A: Cost of Asset 85000 Salvage Value 2500 Life of Asset 12

Q: 5. Consider an exchange economy with 2 agents and 2 goods. a. In an Edgeworth-Bowley diagram, show…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: With the aid of graphs, explain: (a) demand-pull inflation (b) cost-push inflation.

A: The inflation refers to the rise in the prices of the goods and services over a period of time. It…

Q: Read the following extract and answer the question. Twin deficits key concern for next PH president…

A: The goal of macroeconomic policy is to maximize national income while fostering economic development…

Q: Suppose the value of a bank's variable-rate assets is, liabilities is $100 million. Since this bank…

A: In the banking sector, when there is mismatch between the assets and liabilities of a bank, it is…

Q: c. Explain the concept of minimum efficient scale and its relevance for determining when a market is…

A: Market refers to the place where the buyers or sellers sell and buy goods and services in the…

Q: 4)r Consider an economy with 4 individuals: 2 of them are high school graduates and the other 2…

A: Calculation of Variance:- High school graduates earn $3 and $5 per hour College school graduates…

Q: QUESTION 4 According to the IS curve, when interest rate i increases, equilibrium output Y will…

A: The i in the IS curve is the interest rate. Investment depends on this i. When the interest rate i…

Q: Moral hazard problems associated with debt financing, such as issuing bonds, can be reduced but not…

A: A bond is an objective to maintain that symbolizes an investor's obligation to a lender (typically…

Q: If the Federal Reserve decides to raise the interest rate to solve a potential inflation problem,…

A: In the United States, if Federal Reserve raised interest rate to deal with inflation, it is known as…

Q: Two firms, A and B, are contemplating exporting a local fruit called durian to another country that…

A: a) The payoff matrix of the game can be represented as : Firm B Firm A Export Don't…

Q: Suppose you have log(wage) = Bo + B1 * educ + B2 * exper + B3 * white + B4 * experXwhite + u The…

A: The experience of white workers is represented by the variable "experXwhite" which eventually shows…

Q: Consider the following data for country B, an open economy, for this year: Y = $14 trillion…

A: Politicians and economists use a variety of approaches to evaluate a country's economic health. Some…

Q: The demand for a monopolist's output is 6,000/(p + 7)2, where p is the price it charges. At a price…

Q: d. State and explain Walras Law. What are the implications of Walras's Law? Illustrate Walras Law in…

A: The Edgeworth box is a two-dimensional depiction of a simple and closed economy with two individuals…

Q: 3. Use an appropriate diagram to show and discuss how the consideration of a land expropriation bill…

Q: d) Undesired investment occurs.

A: Demand pull inflation is due to when aggregate demand exceeded aggregate supply. AD -AS > 0,…

Q: Elasticity Analysis: Answer the questions and show your solutions by illustrating a graph supporting…

Q: uppose the Queensland Government is considering a project where COVID vaccinations can be provided…

A: NPV (Net present Value ) refers to the discounted value of future cash flows . NPV shows the net…

Q: Discuss in brief the various techniques of demand forecasting.

A: Meaning of Economics: The term economics refers to the situation under which there remain…

Q: A manufacturing company plans to expand their production and logistics facility into one of the…

A: The most optimistic approach is taken by the Maximax criteria. In this situation, the most hopeful…

Q: How important are services in the U.S. economy?

A: Meaning of Economics: The term economics refers to the situation under which there remain…

Q: 1. Your rich uncle has offered you two living trust payouts for the rest of your life. The positive…

A: The minimum acceptable rate of return also known as (MARR) is the rate of return a management or…

Q: Three roommates, Alan, Billy and Casey, are planning to spend the weekend in their dorm room…

A: The willingness to pay refers to the lowest or highest price at which a client will purchase one…

Q: ompute for the missing values in the table. Show your solutions below. Quantity of Variable INPUT…

A: Total product is the total output produced. Marginal product refers to change in total product from…

Q: Economics Assume that a country is endowed with 47 units of oil reserve. (a) the marginal…

A: * SOLUTION :- Given that , Marginal willingness to pay = demand curve equation : P = 10 -…

Q: Explain what is meant by heteroskedasticity and discuss why this problem needs to be addressed if…

A: (Q) Explain what is meant by heteroskedasticity and discuss why this problem needs to be addressed…

Q: and function solution

A: Cross elasticity of demand Cross price elasticity of demand between two goods is the responsiveness…

Q: When a firm dumps a product in another country, it sells it at O a lower price in the foreign…

A: Since you have asked multiple questions, we could solve only one question for you. If you want any…

Q: In your own words, explain the horizontal and vertical interpretation of the demand curve. 2.…

A: Demand - it refers to the quantity of a good that a consumer is able and willing to purchase during…

Q: Figure: Coffee Trade Domestic Price of Coffee supply $9.50 World 6.00 price World supply Domestic…

A: The world price is below the equilibrium price where quantity demanded is greater than quantity…

Q: 1. Firms competing in an oligopoly could essentially cooperate a. and act as one monopolist and…

A: Dear student, you have asked multiple questions in a single post. In such a case, I will be…

Q: A bank's reserves include its Multiple Choice vault cash and deposits with the Federal Reserve.…

A: Every bank is required to hold reserves by the central bank

Q: On a clearly labeled graph, show what happens to wages paid and employment if the government imposes…

Q: Consider the market for ice cream cones. Suppose that supply in this market is given by PS = QS and…

A: The price elasticity of supply is a measurement of how sensitive the amount provided is to price…

Q: If you deposit money in the bank for one year scenario 1: nominal interest rate = 10%, inflation…

A: For the deposit, the growth is more when the real interest rate is higher. This implies when there…

Q: In periods of rapid U.S. growth, the rapid growth usually adds to large U.S. trade deficits by: O…

A: Trade deficit is a situation of BOP(balance of payments) when the imports(M) exceeds the exports(X).…

Q: . Consider a market that consists of 360 consumers, i = 1,..., 360, each with the following…

A: Number of consumers = 360 Individual Utility function : ui = m + logxi Value of individual…

Q: Which consideration would not be relevant in determining the entity’s functional currency? The…

A: When talking about functional currency, it can be said that it is the form of money in which an…

Q: What change in the budget deficit will cause the trade deficit to increase, all else the same? A)…

A: Budget deficit:- A budget deficit develops whenever spending exceeds receipts, negatively damaging a…

Q: 1. The table below reports the unemployment rate, labor force participation rate, and (working-age)…

A: The labor force participation rate is an estimate of an economy's active workforce. The formula is…

Q: The demand for a monopolist's output is 6,000/(p + 7)2, where p is the price it charges. At a price…

A: Given:- Demand- 6000/(p+7)2 Price=$4 To calculate:- Elasticity of demand=? Please find the images…

Q: SA inflation eases slightly in January Inflation eased to 5.7% in January, down from 5.9% the month…

A: In the given situation, it is said that inflation eased to 5.7% down from 5.9% the month prior. This…

Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Please answer fast please arjent help please

5) Why is a firm willing to produce at a loss in
the short run if the loss is no greater than the
fixed costs of the firm?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Explanation

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.
Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?
Would independent trucking fit the characteristics of a perfectly competitive industry?
Do entry and exit occur in the short run, the long run, both, or neither?
Consider a firm that is currently producing a level of output that maximizes its profits. The firm generates revenue of $40 million per month. Each month, the firm spends $30 million on worker compensation and $20 million on renting buildings and machinery. a) What is this firm’s current monthly profit? b) Should this firm continue to operate in the short run? Why?
19.What is meant by zero economic profit? If a firm earns zero economic profit in long run does it violate the profit maximizing behaviour of a firm in long run as if there is no profit then there is no point of production?
. 1. What area represents the firm's profit? 2.At which output level are economies of scale exhausted? 3.Does this graph most likely represent the long run or the short run? Why?
11 true or false The minimum short-run average total cost occurs at a level of output that is greater than that at which average variable cost is at a minimum
1. Every firm will have a U-shaped cost curve in the short-run because a. Every firm faces resource limitations b. Every firm faces rising capital costs during an economic recession c. Of the law of diminishing marginal returns d. Of labor unions
Which statement must be false? a) When a firm has increasing returns to scale in production, its marginal cost curve will be downward sloping. b) When a firm has constant returns to scale, its total cost curve will be an upward sloping line. c) When a firm has diminishing returns to scale in production, its average cost curve will be upward sloping. d) Every firm faces eventually diminishing returns to scale, where its average cost curve reaches its minimum.
(a) Suppose initially there is a long run equilibrium in a perfeetly competitive market. If suddenly there is a negative demand shock in the market, how the market will adjust to a new long-run equilibrium? Provide adequate graph to supplement your answer.
Suppose a perfectly competitive firm uses labor and capital to produce. In the short run, the quantity of labor is variable and the quantity of capital is fixed. The cost curve estimated by the manufacturer based on capital and labor is: *EQUATION ATTACH AS PHOTO, a. What is the lowest price the manufacturer expects in the long run?b. If factors prices remain constant, what is the lowest product price that firms will continue to operate in the short run?c. If the product price is $120 , how many products will the manufacturer produce in the short run?