Whether to agree or disagree with the given statements.

Question

Want to see more full solutions like this?

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.

Want to see more full solutions like this?

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

Students have asked these similar questions

Identify the two curves shown on the graph, and explain their upward and downward slopes. Why does curve Aintersect the horizontal axis? What is the significance of quantity d? What does erepresent? How would the optimal quantity of information change if the marginal benefit of information increased—that is, if the marginal benefit curve shifted upward?

6. Rent seeking The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relieve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. 18 200 20 16 16 14 PRICE (Dollars per dose) 12 10 10 8 4 2 MC = ATC MR Demand 0 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of doses per year) Monopoly Outcome Monopoly Profits Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its…

Consider a call option on a stock that does not pay dividends. The stock price is $100 per share, and the risk-free interest rate is 10%. The call strike is $100 (at the money). The stock moves randomly with u=2 and d=0.5. 1. Write the system of equations to replicate the option using A shares and B bonds. 2. Solve the system of equations and determine the number of shares and the number of bonds needed to replicate the option. Show your answer with 4 decimal places (x.xxxx); do not round intermediate calculations. This is easy to do in Excel. A = B = 3. Use A shares and B bonds from the prior question to calculate the premium on the option. Again, do not round intermediate calculations and show your answer with 4 decimal places. Call premium =

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.

Want to see more full solutions like this?

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

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.

Want to see more full solutions like this?

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

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.

Want to see more full solutions like this?

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.