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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Chapter 21, Problem 18CQ
To determine
The reason for anyone ever bid a positive
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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?
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Chapter 21 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- 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?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardShould a company produce more goods when marginal revenue is greater than marginal costs? Explain.arrow_forward
- Should the company also reduce price in order to maintain market share, or should the company maintain its current price?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_forwardhow does the theory of the firm differ from short term profit - maximisation? why is the former superior to the latter?arrow_forward
- What 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_forwardDecide whether a firm making short-run losses should continue to operate or shut down its operations.arrow_forwardExplain why a company would shut down in the short run.arrow_forward
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