tailieunhanh - Câu hỏi đánh giá môn Kinh tế vĩ mô bằng tiếng Anh- Chương 8

Tham khảo tài liệu 'câu hỏi đánh giá môn kinh tế vĩ mô bằng tiếng anh- chương 8', kinh tế - quản lý, kinh tế học phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 8 Profit Maximization and Competitive Supply Formatted Font Times New Roman 13 pt Formatted Space Before line CHAPTER 8 After line Line spacing a----------------------------------------------- lines PROFIT MAXIMIZATION AND COMPETITIVE SUPPLY REVIEW QUESTIONS 1. Why would a firm that incurs losses choose to produce rather than shut down Losses occur when revenues do not cover total costs. Revenues could be greater than variable costs but not total costs in which case the firm is better off producing in the short run rather than shutting down even though they are incurring a loss. The firm should compare the level of loss with no production to the level of loss with positive production and pick the option that results in the smallest loss. In the short run losses will be minimized as long as the firm covers its variable costs. In the long run all costs are variable and thus all costs must be covered if the firm is to remain in business. 2. Explain why the industry supply curve is not the long-run industry marginal cost curve. In the short run a change in the market price induces the profit-maximizing firm to change its optimal level of output. This optimal output occurs when price is equal to marginal cost as long as marginal cost exceeds average variable cost. Therefore the supply curve of the firm is its marginal cost curve above average variable cost. When the price falls below average variable cost the firm will shut down. In the long run the firm adjusts its inputs so that its long-run marginal cost is equal to the market price. At this level of output it is operating on a short-run marginal cost curve where short-run marginal cost is equal to price. As the long-run price changes the firm gradually changes its mix of inputs to 102 Chapter 8 Profit Maximization and Competitive Supply minimize cost. Thus the long-run supply response is this adjustment from one set of short-run marginal cost curves to another. Note also that in the long run .