Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 8, Problem 22RQ
How does the
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Why should a firm shut down if its average variable cost curve is above the price of their product?
What is the shutdown decision of the firm? How should a firm decide whether to continue business or shut down in the short run?
Can you explain to me why in the short run, firms only use variable cost to determine whether or not to shut down.
Chapter 8 Solutions
Principles of Economics 2e
Ch. 8 - Firms ill a perfectly competitive market are said...Ch. 8 - Would independent trucking fit the characteristics...Ch. 8 - Look at Table 8.13. What would happen to the films...Ch. 8 - Suppose that the market price increases to 6, as...Ch. 8 - Explain in words why a profit-maximizing film will...Ch. 8 - A firms marginal cost curve above the average...Ch. 8 - If new technology in a perfectly competitive...Ch. 8 - A market in perfect competition is in long-run...Ch. 8 - Productive efficiency and allocative efficiency...Ch. 8 - Explain how the profit-maximizing rule of setting...
Ch. 8 - A single firm in a perfectly competitive market is...Ch. 8 - What are the four basic assumptions of perfect...Ch. 8 - What is a price taker firm?Ch. 8 - How does a perfectly competitive firm decide what...Ch. 8 - What prevents a perfectly competitive firm from...Ch. 8 - How does a perfectly competitive film calculate...Ch. 8 - Briefly explain the reason for the shape of a...Ch. 8 - What two rules does a perfectly competitive firm...Ch. 8 - How does the average cost curve help to show...Ch. 8 - What two lines on a cost curve diagram intersect...Ch. 8 - Should a firm shut down immediately if it is...Ch. 8 - How does the average variable cost curve help a...Ch. 8 - What two lines on a cost curve diagram intersect...Ch. 8 - Why does entry occur?Ch. 8 - Why does exit occur?Ch. 8 - Do entry and exit occur in the short run, the long...Ch. 8 - What price will a perfectly competitive firm end...Ch. 8 - Will a perfectly competitive market display...Ch. 8 - Will a perfectly competitive market display...Ch. 8 - Finding a life partner is a complicated process...Ch. 8 - Can you name five examples of perfectly...Ch. 8 - Your company operates in a perfectly competitive...Ch. 8 - Since a perfectly competitive firm can sell as...Ch. 8 - Many films in the United States file for...Ch. 8 - Why will profits for films in a perfectly...Ch. 8 - Why will losses for firms in a perfectly...Ch. 8 - Assuming that the market for cigarettes is in...Ch. 8 - In the argument for why perfect competition is...Ch. 8 - The AAA Aquarium Co. sells aquariums for 20 each....Ch. 8 - Perfectly competitive firm Doggies Paradise Inc....Ch. 8 - A computer company produces affordable,...
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Similar questions
- Why would a firm that is making loss in the short-run choose to operate rather than shut down?arrow_forwardWhy is it reasonable to think of normal profit as a type of cost to the firm?arrow_forwardUnder what conditions will a firm shut down temporarily? Explain theoretically and graphically.arrow_forward
- What will be the firms total profit?arrow_forwardWhen would a profit-maximizing firm shut down in the short run?arrow_forwardIf a firm’s current revenues are less than its current variable costs, when should it shut down? If the firm decides to shut down, should we expect that decision to be final? Explain using an example that is not in the book.arrow_forward
- Why do a firm's profit disappear in the long run?arrow_forward"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.arrow_forwardWhat is the relationship between marginal cost and the short-run supply curve for the purely competitive firm?arrow_forward
- In the short run, the firm shouldarrow_forwardIn the short-run, if the marginal cost of a firm in a competitive industry is increasing while its average variable cost is downward sloping, what can you say about slope of average total cost?arrow_forwardIn the short-run, if the marginal cost of a firm in a competitive industry is upward sloping while itsaverage variable cost is downward sloping, what can you say about slope of average total cost?arrow_forward
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