Should a firm making a loss in the short-run always leave the market? Why or why...
Should a firm making a loss in the short-run always leave the market? Why or why not? What about in the long-run?
Homework Answers
Firm will not leave the industry in short run if it is covering all its variable cost. If it is not able to earn even its variable cost than firm should leave the industry. In this if price is higher than Average variable cost than firm will not leave in short run but if price is less than AVC than firm should shut down.
In long run firm will leave the industry if it is not covering all its cost or price is less than average total cost.
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Should a firm making a loss in the short-run always
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In the short-run, a firm in a perfectly competitive market is making a loss. Describe how...
In the short-run, a firm in a perfectly competitive market is making a loss. Describe how the firm should decide if it should continue production or stop production.
Problem 1: a. Draw a situation where a perfectly competitive firm is making a loss, make sure to label loss. When should the firm shut down? (Make sure to include a market diagram). b. State and draw...
Problem 1: a. Draw a situation where a perfectly competitive firm is making a loss, make sure to label loss. When should the firm shut down? (Make sure to include a market diagram). b. State and draw a graph explaining the long run equilibrium in a perfectly competitive market. Why does the market come to rest at this point? Explain.
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In the following figure, a monopolistically competitive firm is in the short run. In this scenario, P < ATC, which means that this firm is making a loss. This short-run loss means that other firms will exit the market because they are making a loss as well. Shift a curve, or curves, to depict the effect of firms exiting this market in the long run. When shifting the curve, or curves, make sure not to change the slope of the...
Thanks in advance 4) Explain why a firm should continue to operate in the short run...
Thanks in advance
4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.
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A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this frm in the short run? e This firm should shut down production immediately o This firm should produce more than what it is aurrently producing O This firm should not shut down production in the short run. eThere is not enough information provided to answer. 1 pts Question 16 A firm is...
4. Short-run profit maximization or loss minimization for a perfectly competitive firm Suppose that the market...
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16. A firm is seeing a $500 loss in the short run. The fixed cost of...
16. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $200. What is the best decision for this firm in the short run? This firm should shut down production immediately There is not enough information provided to answer. This firm should not shut down production in the short run. This firm should produce more than what it is currently producing.
Problem 1: a. Draw a situation where a perfectly competitive firm is making a loss, make...
Problem 1: a. Draw a situation where a perfectly competitive firm is making a loss, make sure to label loss. When should the firm shut down? (Make sure to include a market diagram). b. State and draw a graph explaining the long run equilibrium in a perfectly competitive market. Why does the market come to rest at this point? Explain.
8. In the short run, a perfectly competitive firm will shut down if it is producing...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
Use the following graphs for a perfectly competitive market in the short run to answer the...
Use the following graphs for a perfectly competitive market in the short run to answer the next question. P MC ATC D MR Which of the following statements is true? Multiple Choice The firm is generating a loss. The firm should increase production in the short run. The firm is earning a normal profit The firm is making economic profits.
In the following figure, a monopolistically competitive firm is in the short run. In this scenario, P < ATC, which means that this firm is making a loss. This short-run loss means that other firms will exit the market because they are making a loss as well. Shift a curve, or curves, to depict the effect of firms exiting this market in the long run. When shifting the curve, or curves, make sure not to change the slope of the...
Thanks in advance
4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.
A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this frm in the short run? e This firm should shut down production immediately o This firm should produce more than what it is aurrently producing O This firm should not shut down production in the short run. eThere is not enough information provided to answer. 1 pts Question 16 A firm is...
4. Short-run profit maximization or loss minimization for a perfectly competitive firm Suppose that the market for cashmere sweaters is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. Profit or Loss PRICE AND COST (Dollars per sweater) 0 10 90 100 20 30 40 50 60 70 80 QUANTITY OF OUTPUT (Sweaters) In the short run, at a market price of $80 per sweater, this firm will choose to...
16. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $200. What is the best decision for this firm in the short run? This firm should shut down production immediately There is not enough information provided to answer. This firm should not shut down production in the short run. This firm should produce more than what it is currently producing.
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
Use the following graphs for a perfectly competitive market in the short run to answer the next question. P MC ATC D MR Which of the following statements is true? Multiple Choice The firm is generating a loss. The firm should increase production in the short run. The firm is earning a normal profit The firm is making economic profits.
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