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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- Why are abnormal profits of a firm difficult to sustain?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_forwardDanielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?arrow_forward
- The question is related to economics/finance/accounting.arrow_forwardShould a company produce more goods when marginal revenue is greater than marginal costs? Explain.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_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_forwardExplain why a company would shut down in the short run.arrow_forwardSolve the followingarrow_forward
- In the short term, what is the level of q below which losses occur in a business with a total cost of TC = 40+ 4q+q^2, which operates under conditions of perfect competition?arrow_forwardWhat is meant by normal profit?arrow_forwardBall Bearings, Inc., faces costs of production as follows: Total Fixed Costs Total Variable Costs Quantity (Dollars) (Dollars) 100 1 100 50 100 70 3 100 90 4 100 140 100 200 6. 100 360 Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost Quantity (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 1 2 3 4arrow_forward
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