ZuoTi.Pro
Question

QUESTION 27

  1. On the graph, what is the status of this firm?Figure 22.4 Dollars/unit Marginal Cost A E Average Total Cost M F B J Average Variable Cost 92 D H Demand 0 I KL N Quantity (

    It is earning economic profits and should stay open in the long run

    It is earning quasi-rents and should stay open in the short-run but not the long-run

    It is earning quasi-rents and should stay open in the short- and long-run.

    It is not earning economic profit or quasi-rent and should shut down immediately.
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Ans. It is earning quasi-rents and should stay open in the short-run but not the long-run.

Since the point of intersection of marginal revenue and marginal cost gives the equilibrium quantity and the vertical line that connects it to the demand curve the equilibrium price, we see that the price lies above the average variable cost and below the average total cost. Hence, since the firm is able to cover the average variable cost it should produce in the short run. But since it is not able to cover the average total cost it should not produce in the long run.

0 0
Add a comment
Know the answer?
Add Answer to:
QUESTION 27 On the graph, what is the status of this firm? It is earning economic...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Remaining Time: 45 minutes, 53 seconds. Question Completion Status: QUESTION 26 Figure 22.4 Dollars/unit Α. E...

    Remaining Time: 45 minutes, 53 seconds. Question Completion Status: QUESTION 26 Figure 22.4 Dollars/unit Α. E Marginal Cost Average Total Cost M F B J Average Variable Cost 972 c D H Demand 0 I KL N Quantity (units/week) Marginal Revenue On the graph, what is the long-run profit earned by the monopolist? O AEFB AJC CAFB This monopolist earns long-run losses. QUESTION 27

  • If a firm is earning economic losses,

     1. If a firm is earning economic losses, a. it also has an accounting loss. b. the owner could be earning more in some other occupation. c. the firm must go out of business in the short run. d. new firms will want to get into that industry. 2. Economists say that a firm has a normal profit when a. it earns a return of at least 10 percent. b. its accounting profit exceeds its implicit costs. c. it can pay all its variable costs. d....

  • QUESTION 17 If Ajax a manufacturing firm is earning zero economic profits A. the revenues for...

    QUESTION 17 If Ajax a manufacturing firm is earning zero economic profits A. the revenues for Ajax are sufficient to pay explicit costs but not implicit costs B. the owner of Ajax are earning enough to pay their explicit costs only C. the owner of Ajax will not be able to pay himself D. Ajax will shut down in the long run, but will continue to operate in the short run

  • 8. A perfectly competitive firm is earning an economic profit. In the short run it should...

    8. A perfectly competitive firm is earning an economic profit. In the short run it should In the long run it should A. shut down; expand B. produce where MC = MR; leave the industry C. produce where MC = MR; expand production D. shut down; exit the industry 9. In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC? A. P> MC and...

  • UESTION 26 On the graph, what is the long-run profit earned by the monopolist? AEFB AJC...

    UESTION 26 On the graph, what is the long-run profit earned by the monopolist? AEFB AJC AFB This monopolist earns long-run losses. Figure 22.4 Dollars/unit A E Marginal Cost Average Total Cost M F B J Average Variable Cost C D H Demand 0 I KL N Quantity (units/week) Marginal Revenue

  • 2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is...

    2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is S20,000 per month. a) Should this firm produce or shut down in the short run? Explain. Should it stay in the industry or exit in the long run? Explain. b) Suppose instead that this business has a fixed cost of S35,000 per month. Should it produce or shut down in the short run? Explain. Should it stay in the industry or exit in the...

  • 8. Refer to the graph above depicting a perfectly competitive firm. When maximizing profit, the total...

    8. Refer to the graph above depicting a perfectly competitive firm. When maximizing profit, the total profit earned by the firm represented is: A. $220. B. $275. C. $330 D. $605, 26. Refer to the graph above of a monopolistically competitive firm. If the firm maximizes profit, it will earn: A. zero economic profit this year. B. $320,000 economic profit this year. C. 584,000 economic profit this year. D. $56,000 economic profit this year. ATC AVC - 01 02 03...

  • In the short run, a perfectly competitive firm might earn negative economic profits and then decide...

    In the short run, a perfectly competitive firm might earn negative economic profits and then decide to shut down. On a graph, show this situation, using marginal revenue, marginal cost, average-total-cost, and average-variable-cost curves. Indicate the level of output at which the firm will no longer produce. Explain why your graph shows the shut down point.

  • Question 4: Novotel Lotus provides catered meals, and the catered meals industry is perfectly competitive. Novotel...

    Question 4: Novotel Lotus provides catered meals, and the catered meals industry is perfectly competitive. Novotel Lotus machinery costs $100 per day and is the only fixed input. The firm's variable cost consists of the wages paid to the cooks and the food ingredients. The variable cost per day associated with each level of output is given in the accompanying table. Quantity of meals VC TC MC AVC ATC $200 $300 $480 $700 $1000 4.1. Calculate the total cost, the...

  • 28. Refer to Figure 14-13. If the price is $2 in the short run, what will happen in the long run? a. Individual f...

    28. Refer to Figure 14-13. If the price is $2 in the short run, what will happen in the long run? a. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry b. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. c. Because the price is below the firm's average variable costs, the firms will shut down. d....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT