Whether to agree or disagree with the given statements.

Question

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Answer 1

Question

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

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Students have asked these similar questions

Solve the following

Draw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.

Problem 2. Restaurants in Baltimore operate under a total cost function TC(q) = 3q + 5q^2 + 30 Which part of the cost is fixed cost and which part of the cost is variable cost? What is the marginal cost, MC? What is the average total cost, ATC? What is the average variable cost, AVC? In the long run, calculate the equilibrium price and restaurants’ profits. Below what price will restaurants shut down? (Hint: Consider the AVC.)

Answer 2

Question

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

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Answer 3

Question

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

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Answer 4

Question

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

Answer 6

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.

Economics Concept Introduction

Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.

Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.

Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.

Answer 7

Chapter 9, Problem 1.1P

To determine

Whether to agree or disagree with the given statements.

Answer 8

Expert Solution & Answer

Answer to Problem 1.1P

Option (a): Disagree

Option (b): Disagree

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option ‘a’:

A firm which earns a profit in the short run may not necessarily increase its scale of operation in the long run. A firm may expand its production only if it also expects a profit in the long run. If there is no expected positive profit, the firm will not continue its production. Thus, the given statement is disagreed.

Option ‘b’:

The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.