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When would a profit-maximizing firm shut down in the short run?
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Solved in 2 steps
- Explain why a company would shut down in the short run.Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down? Think of recent examples.Should the firm shut down in the short-run? Explain in detail why or why not.
- Why would a firm that is making loss in the short-run choose to operate rather than shut down?Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?When will a business shut-down in the short-run?
- Consider the following market for Tim's Terrible T-shirts a firm company producing in the monopolistically competitive t-shirt market. MC $14 $12 ATC $10 $8 $6 $4 $2 MR 0. 10 30 40 50 60 70 80 Quantity Price 20Describe how your restaurant would maximize its short-run profits.How does perfect competition effect the pharmaceutical industry?