Why would a company continue to operate for many years while never once turning a profit rather than shut down immediately? Using revenue and cost analysis, explain when the company would shut down
What will be an ideal response?
A company would continue to operate rather than shut down so long as it could cover its variable costs. If revenues did not cover all of the firm's variable costs, it would shut down.
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Suppose a bank has $300,000 in deposits, a reserve ratio of 5 percent, and bank reserves of $45,000. This bank can make new loans in the amount of
A) $345,000. B) $45,000. C) $30,000. D) $15,000.
Dana's utility of wealth is 65 units at $3,000, 80 units at $5,000, and 95 units at $9,000. Starting from zero wealth, he must choose between options A and B. Option A gives him $5,000 for sure
Option B gives him $3,000 with probability 0.5 or $9,000 with probability 0.5. Dana will A) choose option A. B) choose option B. C) be indifferent between option A and option B because they have the same risk. D) be indifferent between option A and option B because they have the same expected utility.