Microeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280618
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 10, Problem 3TY
To determine
To Check:The reason for not to close the business when the firm earns zero economic profit.
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Students have asked these similar questions
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?
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.
Chapter 10 Solutions
Microeconomics: Principles and Policy (MindTap Course List)
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Similar questions
- Under what conditions will a firm shut down temporarily? Explain.arrow_forwardDecide whether a firm making short-run losses should continue to operate or shut down its operations.arrow_forwardMany firms, especially in perfectly competitive markets, file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?arrow_forward
- Can you explain to me why in the short run, firms only use variable cost to determine whether or not to shut down.arrow_forwardUnder what conditions will a firm shut down temporarily? Explain theoretically and graphically.arrow_forwardShould the firm shut down in the short-run? Explain in detail why or why not.arrow_forward
- WHY SOME FIRMS MIGHT BE ABLE TO CONTINUE TO MAKE AN ACONOMIC PROFIT IN THE LONG RUN?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardSmall “Mom and Pop firms,” like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this?arrow_forward
- Why should a firm shut down if its average variable cost curve is above the price of their product?arrow_forwardDiscuss where does the shutdown being and why? What does the company has to do to get back to supernormal profit?arrow_forwardConsider the concepts of accounting profit and economic profit. Suppose you are a consultant and you are meeting with a business owner who is trying to decide whether to keep that business open or open a business in a different industry. Discuss the differences between accounting profit and economic profit and why it should matters in this circumstance.arrow_forward
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