Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.

Q: If a firm shuts down temporarily, it will incur loss equal to

A: To find:  If a firm shuts down temporarily, it will incur loss equal to

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: Determine the shutdown point for the company having the following cost function: TC(q) = 10 + 5q –…

A: When a firm is not able to cover its variable cost from its total revenue then in the short run the…

Q: “Even if a firm is losing money, it may be better to stay in business in the short run.” Is this…

A: Yes, in the short run, it may be better to run the firm even if it is losing money.

Q: Explain why it is not economical for a firm to operate under increasing returns and negative…

A: Solution: Increasing return: It is the first phase of production. In this phase every additional…

Q: The difference between economic profit and accounting profit is that economic profit is calculated…

A: Out-of-pocket costs are expenditures that appear to have been incurred. Employee compensation and…

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: After one month of operation, OU Café determined to shorten its business hours and close on…

A: The total costs of any firm includes fixed costs and variable costs. The fixed costs refer to those…

Q: Under a PCM, the long run equilibrium situation is that, Economic profit is equal to zero. Is this…

A: Under perfect competition market,Firms are price taker.Therefore whatever price is set by…

Q: Revenue, Cost MC AC AVC E AR = MR R Output Which point in the diagram is the shut-down point for the…

A: The total cost incurred by a firm can be divided/split into two- fixed costs(TFC) and variable…

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: Refer to the diagram below:…

A: Answer - Shut Down Point - The point where firm is not able to recover there average variable cost…

Q: Given the graph below showing short-run cost curves for a competitive firm, at what price would the…

A: In perfectly competitive market, price is constant so it equal to marginal revenue. At profit…

Q: Consider the graph below. Should this firm stay oper shut down in the short run and why? MC ATC* AVC…

A: Over the short run, firm must get variable cost recovered to stay open in the market. A firm will…

Q: For the pizza seller whose marginal, average variable, and average total cost curves are shown…

A: In a perfectly competitive market there are large number of firms producing similar and identical…

Q: The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive…

A: Answer to the question is as follows :

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: 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: A firm should always shut down if its revenue is *         a)less than its avoidable costs.…

A: Fixed cost is independent of output produced whereas variable cost varies with the level of…

Q: Complete the table and answer the following questions. The price for this perfectly competitive firm…

A:

Q: Using curves, graphically, a firm will shutdown if what? What is an output at which the firm makes a…

A: Economic profit refers to the excess of total revenue over total cost.  To calculate the economic…

Q: In a perfectly competitive market, please compare the short run and long run prices in an increasing…

A: Perfect competition refers to the market structure where there are a large of number of buyers and…

Q: Consider the following costs of a typical firm in a purely competitive industry. The firm has no…

A: According to the given information, there is a perfectly competitive market having no fixed cost. A…

Q: Lisa lawn Company (LLC) is a lawn mowing business in a perfectly competitive market for lawn mowing…

A: Here, the given table shows the quantity of lawn mowing per hour and total cost of per lawn mowing…

Q: The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.       a) At the…

A: A monopoly is a sole producer of a good thus  having maximum market power and will act as a price…

Q: 'In the short run, the firm should shut down only if the price is less than average variable cost''…

A: This statement is absolutely correct.

Q: In the short run, a firm’s decision to shutdown should not take into considerationa. avoidable…

A: ANSWER   In the short run, a firm’s decision to shut down should not take into consideration is

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: An industry in which the long-run ATC continues to decline as firm size increases will likely become…

A: There exist different types of monopoly market structures. The common feature of the monopoly market…

Q: If a firm’s current revenues are less than its current variable costs, when should it shut down? If…

A: The firms have several things to look after, including the total costs, fixed costs, variable costs,…

Q: If any of your answers are negative, put a minus sign in front of the number. You are given the…

A: We know ,  TC = TFC + TVC  MC = TCn - TCn-1 TFC = AFC * Q TVC = AVC*Q TC = ATC*Q

Q: If a firm sells its output at a price greater than ATC, it will earn economic profit.   Is this…

A: A firm produces at a point where the marginal revenues are equal to the marginal costs.

Q: Given the following information, should the firm shut done or continue to operate in the short run?…

A:

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: Using the graph below, determine if the firm should shut down or stay open in the short run and why.

A: From the graph it is easy to understand the firm is earning profit or in a position of facing loss.

Q: Why is it reasonable to think of normal profit as a type of cost to the firm?

A: In the short run, firms usually try to temporarily shut down their operations when the prices are…

Q: Under what conditions will a competitive firm continue to grow in size? O Until it achieves minimum…

A: Competitive firm would grow until diminishing returns sets in.When increasing returns are there,its…

Q: Dylan's house-cleaning enterprise is a competitive firm. Dylan cleans houses for 39 € cach. His…

A: Answer: Given, Price of house cleaning=39€ eachTotal cost=380€Fixed cost=30€So,Total variable…

Q: Decide whether a firm making short-run losses should continue to operate or shut down its…

A: In the short-run, a profit-maximizing firm will continue producing a positive amount of output even…