11. What must an entrepreneur do to earn a profit? How do theactions of firms earning profits influence the value of resources?What happens to the value of resources when losses arepresent? If a firm making losses goes out of business, is thisbad? Why or why not?

Entrepreneurship is the process of identifying, creating, and pursuing opportunities to create value…

Answered: 11. What must an entrepreneur do to…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 19RQ: How does the average cost curve help to show whether a firm is making profits or losses?

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Similar questions

Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs
What is die difference between accounting and economic profit?
Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?
What is the difference between fixed costs and variable costs?
Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?
What are diminishing marginal returns as they relate to costs?
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
When firms in a competitive market are experiencing zero economic profits, one can assume that O they should be producing a different product. s there is currently no better way to use society's scarce resources. O they will eventually go bankrupt. O accounting losses are being experienced by these firms.
QUESTION 8 Other things equal, if the fixed costs of a firm were to increase by $100.000 per year, which of the following would happen? B.Average fixed costs and average variable costs would O D. Average fixed costs would rise, but marginal O C. Average fixed costs and A. Marginal costs and average variable costs would both rise. average total costs would rise rise costs would fall
8. Questions and Problems 16 People often argue that large firms in an industry have cost advantages over small firms in the same industry. For example, they might assert that a big oil company must have a cost advantage over a small oil company. For this to be true, what condition must exist? O There are no economies of scale. There is no necessary condition for large firms to have a cost advantage over small firms. There are economies of scale, and the small firm is operating at an output level at which economies of scale exist. O There are economies of scale, and the large firm is operating at an output level at which economies of scale exist.
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11. What must an entrepreneur do to earn a profit? How do the actions of firms earning profits influence the value of resources? What happens to the value of resources when losses are present? If a firm making losses goes out of business, is this bad? Why or why not?