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 71 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
Wow, this really help

Dnite

  • Member
  • Posts: 297
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

ACTH levels are normally highest in the early morning (between 6 and 8 A.M.) and lowest in the evening (between 6 and 11 P.M.). Therefore, a doctor who suspects abnormal levels looks for low ACTH in the morning and high ACTH in the evening.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

Did you know?

There are major differences in the metabolism of morphine and the illegal drug heroin. Morphine mostly produces its CNS effects through m-receptors, and at k- and d-receptors. Heroin has a slight affinity for opiate receptors. Most of its actions are due to metabolism to active metabolites (6-acetylmorphine, morphine, and morphine-6-glucuronide).

Characteristics of the individual determine (a) whether they will be exposed to certain stressors ... Characteristics of the individual determine (a) whether they will be exposed to certain stressors ...
How to determine if a table of values represents a function How to determine if a table of values represents a function
How to use the discriminant to determine the value of k in a quadratic with one real root How to use the discriminant to determine the value of k in a quadratic with one real root
Determine the exact value of each trig ratio. Determine the exact value of each trig ratio.
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
How can you determine if the glucose-aversion trait in cockroach? How can you determine if the glucose-aversion trait in cockroach?
Video: Status Epilepticus

For a complete list of videos, visit our video library