Question

the price of a case of ball bearings is $80. seeing that the company can't make a profit, the company's chief executive officer (ceo) decides to shut down operations. the firm's profit in this case is $ . (note: if the firm suffers a loss, enter a negative number in this cell.) true or false: this was a wise decision. true false vaguely remembering an introductory economics course, the chief financial officer tells the ceo it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity. at this level of production, the firm's profit is $ . (note: if the firm suffers a loss, enter a negative number in this cell.). true or false: this is the best decision the firm can make. true false

Answer 1

The firm is experiencing losses and should shut down its operations to avoid further losses.

Step-by-step explanation:

In this case, the firm is experiencing losses of $5 when producing five units of ball bearings. This means that the firm's costs exceed its revenues, resulting in a negative profit. Based on this information, it would not be wise for the company to continue its operations if it cannot make a profit.

The suggestion by the chief financial officer to produce only one case of ball bearings is also not the best decision for the firm. At this level of production, the firm's profit is negative, which indicates that it is still experiencing losses. Therefore, shutting down operations would be the best decision in this scenario.