Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 8, Problem 18CQ
To determine
The reason for anyone ever bid a positive price for a firm operating at a loss.
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How does a firm decide whether to stay in business if it is earning a loss? Discuss in detail.
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?
The correct answer to whether it should be produced is that the firm should produce in the short term if it can either make a profit or a loss less than its total costs.
True or false
Chapter 8 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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- Use the following data to analyze the condition when the product price is set at $32. A. How much would be the economic profit that the firm will realize per unit of output? B. What will be the profit-maximizing or loss-minimizing output? C. How much would be the product price, for the firm to be at a break-even position?arrow_forwardWhat would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? please show work!arrow_forwardMany large corporations, such as General Motors and Apple, operate in markets that are not even close to perfectly competitive. But unlike the products these companies sell, shares of these firms’ common stock are bought and sold in what could be described as a perfectly competitive market. Based on the three conditions that make a market perfectly competitive, what characteristics of the purchase and sale of shares of stock of a large company like GM or Apple, are consistent with perfect competition?arrow_forward
- If all assumptions of perfect competition hold, why would firms in such an industry have little incentive to carry out technological change or much research and development?arrow_forwardWhy are abnormal profits of a firm difficult to sustain?arrow_forwardWhat stage of production is the increase in output that results from increase in a firm's outputs by some proportion? If the firm is operating efficiently, how can it reduce cost in the short run?arrow_forward
- Evaluate the factors affecting firm behavior, such as production and costsarrow_forwardThe part below (in bold) describes a firm that was an early mover in its market. In light of the information provided, indicate whether the firm’s position as an early mover is likely to be the basis of a sustainable competitive advantage. An early mover has the greatest cumulative experience in a business in which the slope of the learning curve is ONE one.arrow_forwardShould the firm shut down in the short-run? Explain in detail why or why not.arrow_forward
- Identify this firm's profit-maximizing rate of output? how many frisbees are being sold? how much profit is typical firm making? at what equilibrium price are all economic profits eliminated? how many firms will be producing frisbees at this long-term price?arrow_forwardWhich of the following represents a long-run decision for the firm? a. rehiring workers who were previously laid off. b. determining what price to charge for a given level of output. c. deciding how much output to supply to the market at the current market price. d. building another wing on the plant in order to add a new assembly line. answer. (d. building another wing on the plant in order to add a new assembly line.) Please help me explain this questions. Thanks in advancearrow_forward
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