Author Question: If a firm doesn't make an economic profit it will shut down. Indicate whether the statement is ... (Read 74 times)

chads108 · **on:** Jul 1, 2018

If a firm doesn't make an economic profit it will shut down.

Indicate whether the statement is true or false

Question 2

If a Cournot duopolist announced that it will double its output,

A) it becomes the leader.
B) the other firm does not view the announcement as credible.
C) the other firm will shut down.
D) the other firm will double output also.

Sarahjh · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

False. The firm compares its losses from operating with its losses when shutting down and will shut down if the latter loss is less.

Answer to Question 2

B