which is the correct answer and why? thank you :) 23. How many of the following
ID: 1116490 • Letter: W
Question
which is the correct answer and why? thank you :)
23. How many of the following firms will exit a market in the long run with certainty? Assume that demand and costs will remain constant over time. · · · · A firm receiving positive accounting profits A firm receiving negative accounting profits A firm receiving positive economic profits A firm receiving negative economic profits a) 1 of the above firms will exit. b) 2 of the above firms will exit. c) 3 of the above firms will exit. d) 4 of the above firms will exit.Explanation / Answer
Only one of the firm will leave the market in the long run. This is because when firms are running negative profits which are called economic losses, firms consider whether to shut down the production and leave the industry in the long run or to continue production for now but ultimately leave the industry in the long run.
No firm is willing to operate in the long run when it is earning economic losses in the short run because it is not fruitful to work continuously at a loss. Correct option is a)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.