This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: You've been hired by an unprofitable firm to determine whether it should shut down its operation. ... (Read 37 times)

clippers!

  • Hero Member
  • *****
  • Posts: 828
on: Jul 1, 2018
You've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day.
 
  The daily wage (per worker) is 100, and the price of the firm's output is 30. The cost of other variable inputs is 500 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is 30. Should the firm continue to operate at a loss? Carefully explain your answer.

Question 2

Competitive firms earn zero profit in the long run when
 
  A) entry is completely free.
  B) entry is limited.
  C) Both A and B.
  D) Neither A nor B.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

al

  • Sr. Member
  • ****
  • Posts: 344
Reply #1 on: Jul 1, 2018
Answer to Question 1

VC = 7,000 + 500. Thus AVC = 7500/300 = 25. Since P > AVC, the firm should continue to operate in the short run.

Answer to Question 2

D


clippers!

  • Member
  • Posts: 828
Reply 2 on: Jul 1, 2018
:D TYSM

tanna.moeller

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

According to the FDA, adverse drug events harmed or killed approximately 1,200,000 people in the United States in the year 2015.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

Interferon was scarce and expensive until 1980, when the interferon gene was inserted into bacteria using recombinant DNA technology, allowing for mass cultivation and purification from bacterial cultures.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Evaluation measures to determine the success of goals Evaluation measures to determine the success of goals
The shut-off switch on a GM parallel hybrid truck is green because this system uses 42 volts instead ... The shut-off switch on a GM parallel hybrid truck is green because this system uses 42 volts instead ...
To reverse the direction of operation, the polarity of the current through the motor is reversed. To reverse the direction of operation, the polarity of the current through the motor is reversed.
Knoop’s experiments to determine the b-oxidation of fatty acids Knoop’s experiments to determine the b-oxidation of fatty acids
Determine if each function is continuous, If the function is not continuous, find the x-axis Determine if each function is continuous, If the function is not continuous, find the x-axis
Determine the mass of a nonvolatile, nonionizing compound that must be added to 4.76 kg of ... Determine the mass of a nonvolatile, nonionizing compound that must be added to 4.76 kg of ...
Video: Interview with Person having Obsessive Compulsive Disorder

For a complete list of videos, visit our video library