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15 Jan 2018

Under what conditions will a firm shut down operations in the short run? Identify an example you are familiar with, or have identified through research, of a business that has temporarily shut down operations in the short run. What led to this decision? Did the firm resume operations at a later date?

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Collen Von
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16 Jan 2018
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Principles of Economics
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Related questions

1.Which one of the following markets has many firms producing a product that is differentiated in nature?

A. Perfect Competition

B. Monopolistic competition

C. Monopoly

D. Oligopoly

2.Which of the following two markets is characterized by the tendency that in the long-run firms will be limited to zero economic profit?

A. Perfect competition

B. Monopoly and Perfect Competition

C. Monopoly and Oligopoly

D. This is a trick question, no firm will produce in the long run with no economic profit

3. If in the short run, a firm's marginal revenue is lower than the average variable cost, we will see the firm do what?

A. Shut down immediately

B. Stay in business but produce less

C. Keep producing in the short run and then shut down

D. Increase output

A cloth producing firm in a perfectly competitive market has the following short-run total cost function: TC 
= 6000 + 400Q – 20Q2
+ Q3
. If the prevailing market price is birr 250 per unit of cloth, 
A. Should the firm produce at this price in the short-run?
B. If the market price is birr 300 per unit, what will be the profit (loss) of the firm at equilibrium? 
Should the firm continue to produce or not?
C. Calculate the shut-down price of this firm?
D. Graphically derive the supply function of the firm.

11.) Which statement is false?
A. The minimum point of the AVC curve is the shutdown point.
B. The minimum point of the ATC curve is the breakeven point.
C. The firm's short-run supply curve runs up the marginal cost curve from the shutdown point all the way up the curve.
D. None of these statements are false.
12.) Which statement is false?
A. The firm's short-run supply curve runs along the MC curve from the shutdown point to the break-even point.
B. The MC curve intersects the ATC curve at the latter's minimum point.
C. Total revenue = price x output sold.
D. None of these statements are false.

26.) If the price were $25, this firm would _______ in the short run and _______ in the long run.
A. shut down; stay in business
B. shut down; go out of business
C. operate; stay in business
D. operate; go out of business

22.) If price is above the break-even point, in the short run the firm will _____ and in the long run the firm will _____.
A. shut down; stay in business
B. shut down; go out of business
C. operate; go out of business
D. operate; stay in business

8.) Which statement is true?
A. Because they are the only seller in the industry, the monopolist does not have to lower their price to sell more output.
B. Most firms in the United States are monopolies.
C. Unlike the perfect competitor, the monopolist does not necessarily produce at that output where MC = MR.
D. None of these statements are true.

15.) In the United States, natural monopolies
A. are easily converted to competitive industries.
B. are common in retailing.
C. are commonly regulated by governments.
D. are rarely regulated by governments.

21.) If a monopoly firm can sell its eighth unit of output for a price of $175, it may expect to receive a price __________ in order to sell more than eight units.
A. of more than $175
B. of $175
C. of less than $175
D. of $100

27.) Which statement is true?
A. Since the monopolist is the only firm in the industry, its profit is calculated differently from the way a perfect competitor would calculate profit.
B. The monopolist's demand curve and marginal revenue curve are the same line.
C. In the long run under monopoly, the most efficient output is the most profitable output.
D. A monopolist may lose money in the short-run

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