Principles of Microeconomics

Stevenson, Betsey;Wolfers, Justin

Chapter 15 Entry, Exit, and Long-Run Prof - all with Video Answers

Educators

Chapter Questions

Problem 1

What does the decision to start a business have in common with the decision to attend college? Beyond the explicit financial costs, what are the implicit opportunity costs that you need to account for when making each decision?

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00:47

Problem 2

Lukia is thinking of quitting her job as TV news editor to start her own business as a freelancer, editing video for media organizations from her home studio. Describe how her accounting profit would be different than her economic profit. How should her analysis of her economic profit (or lack thereof) impact her decision to start her business?

Zach Steedman

Numerade Educator

00:43

Problem 3

Petra's private equity firm is considering investing in a highly profitable local CrossFit gym. However, after researching the local gym market, she expects rival gyms to easily enter and exit the industry in the long run. How should she explain to her partners why this leads her to expect that in the long run, the gym's economic profits will decline to zero.

Danielle Nielsen

Numerade Educator

02:28

Problem 4

Half a century ago, foreign banks were prohibited from operating in Britain unless they had an office that was within walking distance of the Bank of England, which served as the industry's regulator at the time. How would this requirement serve as a barrier to entry into the banking industry in Britain?

Md.Daniyal Arshad

Numerade Educator

Problem 5

For each of the following, briefly explain how it can create a cost advantage for a business.
a. Learning by doing
b. Mass production
c. Research and development

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