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…

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Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter3: Demand, Supply, And The Market Proces

Section: Chapter Questions

Problem 11CQ

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Similar questions

How does the average cost curve help to show whether a firm is making profits or losses?
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?
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 is the difference between fixed costs and variable costs?
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?
1. A firm has three different production facilities, all of which produce the same product. Whilereviewing the firm’s cost data, Ron, a manager, discovered that one of the plants has a higher averagecost than the other plans and suggests closing this plant. Another manager, Jack, notes that the high-cost plant has high fixed costs but that the marginal cost in this plant is lower than in the other plants.He says that the high-cost plant should not be shut down but should expand its operations. Who isright? 2. Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.
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 are present?If a firm making losses goes out of business, is this bad?Why or why not?
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.
Under which of the folowing examples is t likaly that the accounting profit is positive and the economic profit is negative? OA Using a restaurant you purchased to sell Menican food instead of talian food. OR It you use a diamond mine as a touriet atraction instead of using it for mining. Oc Opering a bank branch near a university campus. OD. Such a scenario, where accounting cost is positive and economic profit is negafive, is not possibie.
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

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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?