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 74 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
Gracias!

TheDev123

  • Member
  • Posts: 332
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

The horizontal fraction bar was introduced by the Arabs.

Did you know?

A strange skin disease referred to as Morgellons has occurred in the southern United States and in California. Symptoms include slowly healing sores, joint pain, persistent fatigue, and a sensation of things crawling through the skin. Another symptom is strange-looking, threadlike extrusions coming out of the skin.

Did you know?

In the United States, congenital cytomegalovirus causes one child to become disabled almost every hour. CMV is the leading preventable viral cause of development disability in newborns. These disabilities include hearing or vision loss, and cerebral palsy.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

The high-voltage shut-off switch on a Ford Escape hybrid. The switch is located under the carpet at ... The high-voltage shut-off switch on a Ford Escape hybrid. The switch is located under the carpet at ...
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 ...
Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ... Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ...
How to determine if a table of values represents a function How to determine if a table of values represents a function
Determine the enthalpy change of this reaction Determine the enthalpy change of this reaction
Algebraically determine the exact value of sin(-π/6)+cos (7 π/4) Algebraically determine the exact value of sin(-π/6)+cos (7 π/4)
Video: Glycolysis - Introduction to ATP and the burning of sugar

For a complete list of videos, visit our video library