Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 7.A, Problem 3TY
To determine
Expansion path of the firm.
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Using the figure above, what is profit/loss for the firm?
Describe the four steps taken to obtain a unit profit?
Why is it reasonable to think of normal profit as a type of cost to the firm?
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- In order to maximize the profit, what decision do you think is the most important one? Can business making zero economic profit, but still keep running? And why? Please provide a business example to explain the concept 'diminishing marginal return'.arrow_forward“Even if a firm is losing money, it may be better to stay in business in the short run.” Is this statement ever true? Under what condition(s)?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
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