Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 12, Problem 3P
To determine
The short run profit maximizing output is to be determined.
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Should the firm shut down in the short-run? Explain in detail why or why not.
Under what conditions would a firm decide to shut down in the short run but remain invested in the market in the long run? Explain your reasoning.
Why would a firm that is making loss in the short-run choose to operate rather than shut down?
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- Define perfect competition. Does a firm under perfect competition always make supernormal profit? Explain your answer with appropriate diagrams.arrow_forwardIn the long run, you are given the following: The total revenue curve is TR= -4Q^2 + 28Q +235. The average variable cost curve is AVC = 4Q-36+(100/Q). At what level of output should the firm operate in order to maximize profits?arrow_forward“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?arrow_forward
- the short-run supply curve of a perfect competitive firm is the same as that portion of the marginal cost curve, over and above the minimum portion of the AVC. with graphic support carefully proof this .arrow_forwardIf a competitive firm maximizes short-run profits by producing some quantity of output, which of the following must be TRUE at that level of output? * a)p ≥ AVC b)MR = MC c)p = MC d)All of this answerarrow_forwardABC company had decreasing returns to scale at all levels of output and it is divided up into 2 equal- size smaller firms, what would happen to its overall profits? Discuss.arrow_forward
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