Small “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?
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Small “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?
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- Small “Mom and Pop firms,” like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this?Can you give examples of companies with perfect competition?You turned down a job at ABC Corp last year that would have paid you $125,000 per year and started your own company. When you calculated your economic profit, it came out at $0. You expect the business will be exactly the same next year. ABC called and said you could still take the job. You should... A. Keep running your company as-is. B. Keep running your company but pay yourself less. C. Keep running your company but pay yourself more. D. Shut down your company and take the job at ABC.
- If you're a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?Family Mart like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this? It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss. What are the different type of costs incurred in the short run and in the long run?What industry is the closest example you can think of to perfect competition, and why? What are its characteristics?
- Tim is thinking of opening a garment store. He estimates that it would cost $270000 per year to rent the location and buy the merchandise. In addition, he would have to quit his $63000 per year day job. Tim estimates he can sell $315600 worth of garments in a year. a. What will be the accounting profit and economic profit for Tim? b. If you are an economist, should you suggest opening the store? Why?Why do economists believe that economic profit is the more accurate measure of a business success? Why is economic profit the superior method of determining a business success?What is the firm's profit?
- Explain why a company would shut down in the short run.Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?Discuss where does the shutdown being and why? What does the company has to do to get back to supernormal profit?