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 85 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
Excellent

nanny

  • Member
  • Posts: 313
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

In 1864, the first barbiturate (barbituric acid) was synthesized.

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

Did you know?

People about to have surgery must tell their health care providers about all supplements they take.

Did you know?

Excessive alcohol use costs the country approximately $235 billion every year.

Using Parallax to Determine Distance Using Parallax to Determine Distance
Grace Service, a YMCA missionary, explained that these porters worked at the base of Mount Omei in S Grace Service, a YMCA missionary, explained that these porters worked at the base of Mount Omei in S
On some engines, it is necessary to watch the direction the rotor is pointing to help determine how ... On some engines, it is necessary to watch the direction the rotor is pointing to help determine how ...
A DC voltage is applied across the spark plug gap after the plug fires and the circuit can determine ... A DC voltage is applied across the spark plug gap after the plug fires and the circuit can determine ...
An old set of christmas tree lights have 30 lights, 20.6~ each in a series alignment. Determine ... An old set of christmas tree lights have 30 lights, 20.6~ each in a series alignment. Determine ...
If P(θ) = (√3 /2, -1/ 2), determine the coordinates of P (θ + 90 °) using the unit circle If P(θ) = (√3 /2, -1/ 2), determine the coordinates of P (θ + 90 °) using the unit circle
Video: Ventilation - phases and driving forces

For a complete list of videos, visit our video library