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- Explain how to determine a firm's cost of production and economic profit
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- List the conditions that must exist for a firm to make economic profits over the long runSmall “Mom and Pop" firms sometimes exist even though they do not earn economic profits. How can you explain this? Think about what all is covered in economic profit?Describe the sources of economic profit, both internal to the firm and external to the firm.
- Describe and explain fully the type of economic profit that Is earned if price exceeds average cost. In Deep detail with at least 3 pages longWhat type of economic profit can most firms expect to make in the long run? Explain your answer.Thinking on the Margin to Increase Profitability Have you ever walked into a restaurant for lunch and found it almost empty? Why, you might ask, does the restaurant even bother to stay open? It might seem that the revenue from so few customers could possible cover the cost of running the restaurant. Provide an opinion using the concepts of sunk costs, marginal cost and marginal revenue.
- Using the figure above, what is profit/loss for the firm?Why do a firm's profit disappear in the long run?If Hasan runs the restaurant himself and before setting up this business, he was working in a company as a salesman for $15,000 per year. Hasan owns the building that his restaurant in housed in and could have rented it out for $10,000 per year. Those would be an implicit cost of opening his own restaurant. Calculate the economic profit?
- Explain why a company would shut down in the short run.Question Jake is leaving Shoe Warehouse to open his own shoe boutique. Jake currently earns $40,000 a year at Shoe Warehouse, but he is expecting to earn $170, 000 per year once he is established. Jake has rented a storefront for $40,000 per year and will have to spend $11, 000 on inventory and furniture to start his business. Calculate jake's economic profit. Provide your answer below: FITRIFITWhat are the major characteristics of a firm competing under conditions of perfect competition?