Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 10, Problem 3TY
To determine
A zero economic-profit that earned by a firm.
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Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down? Think of recent examples.
Many firms, especially in perfectly competitive markets, file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
Chapter 10 Solutions
Economics: Principles & Policy
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- Should a firm shut down immediately if it is making losses?arrow_forwardExplain some of the different factors that would affect a firm’s profitability and what might make a firm’s profits particularly volatile.arrow_forwardWHY SOME FIRMS MIGHT BE ABLE TO CONTINUE TO MAKE AN ACONOMIC PROFIT IN THE LONG RUN?arrow_forward
- Small “Mom and Pop firms,” like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this?arrow_forwardHow does a firm decide whether to stay in business if it is earning a loss? Discuss in detail.arrow_forwardSuppose you run a small business in your building and you act also as a manager of your business. If you do not pay yourself a salary and rent of your building what effect will this practice have on the calculation of the firm’s accounting profit? Economic profit? Explain.arrow_forward
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