Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 21, Problem 18CQ
To determine
The reason for anyone ever bid a positive price for a firm operating at a loss.
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Students have asked these similar questions
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.
Should the firm shut down in the short-run? Explain in detail why or why not.
Chapter 21 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- Why are abnormal profits of a firm difficult to sustain?arrow_forwardWhy would a firm that is making loss in the short-run choose to operate rather than shut down?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
- Why is it reasonable to think of normal profit as a type of cost to the firm?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardUse the following data to analyze the condition when the product price is set at $32. A. How much would be the economic profit that the firm will realize per unit of output? B. What will be the profit-maximizing or loss-minimizing output? C. How much would be the product price, for the firm to be at a break-even position?arrow_forward
- Why should a firm shut down immediately when it can no longer cover their variable.arrow_forwardShould a company produce more goods when marginal revenue is greater than marginal costs? Explain.arrow_forwardWhat would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? please show work!arrow_forward
- The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.arrow_forwardYou turned down a job at ABC Corp last year that would have paid you $125,000 per year and started your own company. When you calculated your economic profit, it came out at $0. You expect the business will be exactly the same next year. ABC called and said you could still take the job. You should... A. Keep running your company as-is. B. Keep running your company but pay yourself less. C. Keep running your company but pay yourself more. D. Shut down your company and take the job at ABC.arrow_forwardDecide whether a firm making short-run losses should continue to operate or shut down its operations.arrow_forward
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