Why would a firm that incurs losses choose to produce rather than shut down

Q: How does a competitive firm determine the quantity that maximizes profit?

A: The markets are considered to be of utmost importance for the economies, because it assists in the…

Q: Why will losses for firms in a perfectly competitive industry tend to vanish in the long run?

A: A perfectly-competitive(PC) market is one where there are infinite number of buyers & sellers…

Q: Why will profits for firms in a perfectly competitive industry tend to vanish in the long run? Would…

A: A market will be perfectly competitive when a larger group of suppliers serve identical or…

Q: Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech…

A: The perfectly competitive is the type of firm where there are large number of buyers and sellers.…

Q: What happens to the value of resources when losses are present? If a firm making losses goes out of…

A: The value of resources decreases when the firms make losses as it would mean that the revenue earned…

Q: must each perfectly competitive firm be in equilibrium if the industry is in the long-run…

A: Perfect competition refers to the situation where there are large number of prouder and consumers…

Q: A firm should shut down in the short run if it is not covering its

A: To find : When should firm shut down.

Q: Can you explain to me why in the short run, firms only use variable cost to determine whether or not…

A: Shutdown point is a point of production where a firm decides not to continue production as producing…

Q: When might a competitive firm shutdown in the short run and exit the market in the long run?

A: When a perfectly competitive firm finds itself in shutdown, that is, its market price is equal to…

Q: Why would a profitable for-profit organization choose to exit a line of business

A: A for-profit firm or organization is described as an entity that mainly generates profit more than…

Q: Shazam, a maker of magic wands, is selling in a purely competitive market.  Its output is 500 wands,…

A: In case of pure competition sellers & buyers are in large numbers & perfectly informed that…

Q: Under what conditions will a firm exit a market? Explain theoretically and graphically.

A: Short‐run supply curve- The short‐run supply curve of the firm is the portion of its marginal cost…

Q: Why would a firm that is making loss in the short-run choose to operate rather than shut down?

A: A short run is a time period in which a firm incurs both fixed cost and variable cost. A long run is…

Q: How much should a firm sell of a particular product in order to maximize profit? What factor does it…

A: A firm should maximize profits and bring in the output level, where there would equilibrium point…

Q: What are the options available to a firm when the market demand exceeds capacity?

A: Here's a set of features that assist companies in proactively addressing excess demand and…

Q: You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you…

A: There is a difference between the cost function in the short-run and in the long-run due to which…

Q: WHY SOME FIRMS MIGHT BE ABLE TO CONTINUE TO MAKE AN ACONOMIC PROFIT IN THE LONG RUN?

A: A monopoly occurs when a single person or corporation serves as the exclusive supply of a certain…

Q: Under what conditions will a firm shut down temporarily? Explain.

A: One of the classifications of a firm’s costs is fixed cost (FC) and variable cost(VC). Fixed costs…

Q: Why would a firm that incur choose to produce rather than to shut down?

A: When the revenue from the sale of the goods or services produced is insufficient to pay the variable…

Q: Is it true that a firm in a perfectly competitive market will never be able to earn positive…

A: There are different types of market which are broadly grouped as: Perfect competition and Imperfect…

Q: Fabulous Farms operates in a perfectly competitive market. Which of the following is required for…

A: In a perfect competition market there is large number of buyer and sellers of good, also in…

Q: In a market that allows free entry and exit, when does the process of entry and exit end for the…

A: New firms enter the market when existing firms are making a positive economic profit in the short…

Q: Do you expect firms in perfectly competitive industries to have high profits in the short run? Why…

A: The perfectly competitive market is a form of market where unlimited no of buyer and seller exist,…

Q: equilibrium

A: The equilibrium of the perfectly competitive firm from the equilibrium of the industry is different…

Q: Many firms, especially in perfectly competitive markets, file for bankruptcy every year, yet they…

A: Firms will shut down when their cost exceed revenue and they cannot continue to compete in the…

Q: Firms always lose money in a long-run industry equilibrium, true or false?

A: Firms always lose money in a long-run industry equilibrium, true or false.

Q: ransaction costs and why are they important to why firms exist? (hint: Coase theory)

A: Coase theorem states that in the presence of well-defined property rights, the parties involved in a…

Q: Why are abnormal profits of a firm difficult to sustain?

A: The abnormal profits under perfectly competitive market are difficult to sustain because of the free…

Q: What is the profit maximizing level of output for the firm? b.What is the economic profit earned or…

A: A market is the collection of buyers and sellers in which they exchange goods and services in terms…

Q: How would the introduction of legal or technical barrier to entry affect the long-run equilibrium in…

A: *Answer:

Q: What are the long-run market equilibrium price and quantity of hibiscus plants? How many firms…

A:

Q: Do you think firms really try to maximize profits? Do firms (especially small ones) know what prices…

A: Economist generally assume that firms act as profit maximisers. Economists don’t think there’s…

Q: Which of the following would not help a firm to improve its competitive position?

A: Market Positioning:- Competitive positioning is a term used to describe how well a marketing people…

Q: The firm depicted by the graph below is producing q0 level of output. Given its costs, is the firm…

A: In this graph, P = MR indicating the constant price at all level of output.

Q: What is the shutdown condition? a.A condition stating when a firm should cease to operate and…

A: The shut-down condition is applicable for short run, where a firm stops production if its revenue is…

Q: why competitive firms stay in business if they make zero profit?

A: First it should be clear that zero economic profit means that total Total Revenue is equal to the…

Q: You witnessed new firms entering a competitive market. What can you infer for the existing firms in…

A: In a market, new firms generally enter if they can see an incentive to generate profit and it is the…

Q: What is the shutdown decision of the firm? How should a firm decide whether to continue business or…

A: For a perfectly competitive company, where the total revenue of the company, i.e. the product of its…

Q: Assume the firms in a perfectly competitive market are initially incurring economic losses. An…

A: The perfectly competitive firm is a price taker and can sell any quantity of commodity at the market…

Q: Describe a firm’s decision to shut down and when to exit the market,and explain the difference…

A: Perfect competition is a market structure that has a large number of buyers and sellers who have…

Q: What do you mean by the equilibrium of a firm?

A: According to the given question In Economics the firm is basically a central institution which helps…