If a business is making a profit in the short run, it has an incentive to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
If a business is making a profit in the short run, it has an incentive to expand existing factories or to build new ones. New firms may start production, as well. When new firms enter the industry in response to increased industry profits it is called exit. Losses are the black thundercloud that causes businesses to flee. If a business is making losses in the short run, it will either keep limping along or just shut down, depending on whether its revenues are covering its variable costs. But in the long run, firms that are facing losses will cease production altogether. The long-run process of reducing production in response to a sustained pattern of losses is called entry. True False If a business is making a profit in the short run, it has an incentive to expand existing factories or to build new ones. New firms may start production, as well. When new firms enter the industry in response to increased industry profits it is called exit. Losses are the black thundercloud that causes businesses to flee. If a business is making losses in the short run, it will either keep limping along or just shut down, depending on whether its revenues are covering its variable costs. But in the long run, firms that are facing losses will cease production altogether. The long-run process of reducing production in response to a sustained pattern of losses is called entry. True False
Expert Answer:
Answer rating: 100% (QA)
Option b False is the correct answer This is because whe... View the full answer
Related Book For
Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
Students also viewed these accounting questions
-
A firm operating in the short run produces 100 units of product, has average total costs of $300, and has average variable costs of $200. What are the firm's total fixed costs?
-
In the short run of a model with sticky prices, a reduction in the money supply raises the nominal interest rate and appreciates the currency (Chapter 15). What happens to the expected real interest...
-
In the short run the price elasticity of the demand and supply of electricity can be very low. a. How might revenue for the electricity industry change if one power plant were shut down for...
-
Observing and Correcting Employee Actions is the same as Discipling Employees Question 2 options: True False
-
Refer to PA12-4. Additional Data: a. Bought new hockey equipment for cash, $500. b. Borrowed $1,200 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on...
-
In Problems 2132, use a calculator to find the approximate value of each expression rounded to two decimal places. cot-1 2
-
True or False: Brand-new ball bearings are being fitted to an existing pump shaft. The shaft is measured and found to be 0.002 inch over specification. Because we are looking to shrink the bearing...
-
A mixture of n-hexane vapor and air leaves a solvent recovery unit and flows through a 70-cm diameter duct at a velocity of 3.00 m/s. At a sampling point in the duct the temperature is 40C, the...
-
Divisional income statements with support department allocationsas follows:follows:controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as...
-
Using the Public MACRO BITCOIN scorecard spreadsheet (linked in its associated masterclass lesson - Long Term 32), create a COPY of it and perform a complete analysis for the date 22/2/2022....
-
(3) Write SQL commands and show the output from Oracle. Your answer must include both SQL commands and the output from Oracle. Note that the output from Oracle should be legible. (50) (3-a) For each...
-
Why is the operating leverage concept important to managers?
-
Evaluate the following statement: Ignoring inflation effects and strategic value can result in overstating a projects financial attractiveness.
-
Define net monetary assets. Define the net exposure of monetary assets and liabilities to currency risk. Why are these measures important?
-
What is percentage change analysis, and why is it useful?
-
What is operating leverage, and how is it measured?
-
3. From the partial worksheet shown on the next page, prepare an income statement. You will need to use 4 columns for this Income Statement. Add in some discounts: Discount allowed: $1025.25...
-
The area of square PQRS is 100 ft2, and A, B, C, and D are the midpoints of the sides. Find the area of square ABCD. B A
-
When the western part of the United States was sparsely populated, many small towns had a single schoolhouse in which one teacher taught all subjects to students of all ages. Nowadays, in large...
-
Why would high transaction costs or imperfect information tend to prevent price-taking behavior?
-
Yuka consumes mangos and oranges. She is given four mangos and three oranges. She can buy or sell mangos for $ 2 each. Similarly, she can buy or sell an orange for $ 1. If Yuka has no other source of...
-
How does attribution theory allow managers to justify workers behaviors?
-
What are common methods to measure a persons attitude?
-
Is stereotyping negative or positive? Why?
Study smarter with the SolutionInn App