2. Explain how firms that are price-makers and choose the price that maximizes total profits can still make economic losses.(8marks)
4. Under what conditions will firms making economic losses choose not to shut down in the short run but shut down in the long run? Explain why.(7marks)
6. Why can monopolies make economic profits in the long run but perfectly competitive firms cannot?(5marks)

Answer rating: 100% (QA)

1 Firms that are pricemakers and choose the price that maximizes total profits can still make economic losses due to a mismatch between their costs an... View the full answer