Short-run and long run profits questions, Microeconomics

Suppose you own a home remodeling company. You are currently earning short-run profits. The home remodeling industry is an increasing-cost industry. In the long run, what do you expect will happen to:

a. Your firm's costs of production?  Explain.

Answer:

According to the problem, the home remodeling industry is an increasing - cost industry, hence the industry will have a rising supply curve and in the long run the firm's cost of production is going to increase. Thus its Marginal cost (MC) curve and Average cost (AC) curve both would be rising in the long run.

 b. The price you can charge for your remodeling services.  Why?

Answer:

The firm will have to charge higher price for remodeling in order to maintain profit in the long run.

 c. Profits in home remodeling? Why?

Answer:

In order to enjoy profits in the long run, the firm has to cover its cost of production. Now as cost of production is very much likely to increase in the long run, hence the firm has to adjust its price in the long run too.

Posted Date: 7/10/2012 8:22:42 AM | Location : United States







Related Discussions:- Short-run and long run profits questions, Assignment Help, Ask Question on Short-run and long run profits questions, Get Answer, Expert's Help, Short-run and long run profits questions Discussions

Write discussion on Short-run and long run profits questions
Your posts are moderated
Related Questions
how much for taking a test

Consider the following: The city council has just approved the construction of a water park in your town. You are responsible for studying the impact of the new water park on the l

Capital Account: The capital account deals with long and short-term capital movement.These capital movements are referred to as autonomous because they take place for business o

my assignment is about richardian model and wanna ask you about few questions

a) Microeconomics is concerned with decision-making within the firm, household or on the individual level, but macroeconomics is concerned with the behavior of the whole economic s

#queA monopolist has a constant marginal and average cost of $10 and faces a demand curve Of Qd = 1000-10P. Marginal revenue is given by MR= 1000-1/5Q. stion..

"Dr. Arata Kochi, the World Health Organisation malaria chief,... [says that] eradication is counterproductive. With enough money, he said, current tools like nets, medicines and D

#suppose EEPCO is amultiplant monopolist with two plants: Gibe plant and Fincha plant. The operating costs of the two plants are: Gibe plant Tc1=10Q^2 and Fincha plant TC2=20Q^2.

1. Consider the consumption decisions of R.B. Turbo, a new student at Teachers College, Columbia University. Ms. Turbo has only available $1,000 in monthly income to spend on food