PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
Publisher: OpenStax
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Textbook Question
Chapter 8, Problem 34CTQ
Many films in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
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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.
Many 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?
Discuss where does the shutdown being and why? What does the company has to do to get back to supernormal profit?
Chapter 8 Solutions
PRINCIPLES OF MICROECONOMICS (OER)
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
- How does perfect competition effect the pharmaceutical industry?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_forwardInformation about Perfectly competitive marketarrow_forward
- What is the competitive structure of the firms listed below and why? A restaurant in a small, isolated community. It’s the only local restaurant. People drive miles away to eat here.arrow_forwardYour company operates in a perfectly competitive market. One of your business partners recommends creating an aggressive advertising campaign for your product in order to boost sales. What is wrong with this reasoning?arrow_forwardCrabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each month from May through September, suffers losses in October, November, and April but remains open, and remains closed from December through March. Given that the restaurant market in this town is perfectly competitive, how would you explain Crabby Bob’s decisions?arrow_forward
- Why would a firm that is making loss in the short-run choose to operate rather than shut down?arrow_forwardThe graph attached illustrates the Demand, Marginal Revenue, Marginal Costs, Average Total Costs and Average variable Cost curves for a firm in a perfectly competitive market. What is the Optimum level of the output for the firm and what is the maximum price the firm can charge? How do you know? At this price and output combination does the firm make economic profit of economic loss? Explain your answer. Calculate the economic profit or loss? Show your calculations.arrow_forwardPrice MC ATC MRDARP Quantity 12. According to ACDC, what does MR DARP stand for? Marginal Revenue, Demand Average Revenue, Price 13. According to the graph above, is the company making a profit, breaking even, or a loss? How do you know? 14. What happens if the ATC is below the MR line? Draw what this would look like. 15. What happens if the ATC is above the MR line? Draw what this would look like.arrow_forward
- Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changes his price to $8. Why? What about the price of $5? What is his profit-maximizing price?arrow_forwardThe Watts Brewing Company owns valuable water rights that allow it to produce better beer than competitors. The company sells its beer at a premium and reports a large profit each year. Is this firm necessarily making economic profits? Explain.arrow_forwardMacmillan Learning Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. How much is the firm making in profit? $ If the goal of your business is to maximize profit, what will your long term strategy be? The business will produce 30 units, and charge a price of $6. Price ($) 10 9 8 7 6 5 4 3 2 1 0 0 10 20 30 E MR MC Đ 40 50 60 70 80 Quantity ATC D 90 100arrow_forward
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