Should a firm ever produce if it is losing money (making a negative economic profit)? Why or why not?
Answer to relevant QuestionsAt the time of its initial public offering (initial sale of stock), Groupon, an Internet company that provides discount coupons, used unusual measures of its business performance (Michael J. de la Merced, “Abracadabra! ...A firm’s revenue varies with its output: R(q). Its manager’s income, Y, equals aR(q), where 0 6 a 6 1 is the manager’s share of the firm’s revenue. Use calculus to prove that maximizing aR(q) implies the same output ...An acquiring firm, A, seeks to buy a target firm, T. The acquiring firm has better managers. The value of the target firm, if acquired by A, is $ 100 million. The value of the target firm under its current management is only ...Why would high transaction costs or imperfect information tend to prevent price-taking behavior?If a specific subsidy (negative tax) of s is given to only one competitive firm, how should that firm change its output level to maximize its profit, and how does its maximum profit change? Use a graph to illustrate your ...
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