Evaluate the following statement. If a firm is suffering economic ...

[eruditmonkey@yahoo.com]

Evaluate the following statement. If a firm is suffering economic losses then the sensible thing to do is to shut down temporarily.
 
  What will be an ideal response?

Question 2

Using Scenario 1 what would happen to your budget constraint if you came up with a study technique that allowed you to earn 3 points for every hour spent studying economics and still only 2 points for every hour spent studying French? What has
 
  happened to the relative price of one hour of studying French?

[taylorsonier]

Answer to Question 1

Not necessarily. A firm should only shut down if it is not earning an operating profit. If a firm is receiving less total revenue than its total variable cost then this advice would make sense.

Answer to Question 2

The budget constraint would pivot out. The relative price of studying French would actually rise since every hour you spend studying French is costing your 3 points towards your economics grade rather than the previous 2 points.

[eruditmonkey@yahoo.com]

TYSM

[isabelt_18]

YES! Correct, THANKS for helping me on my review