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Questions tagged [profits]

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1answer
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Falcons making more profit with cheaper prices: Did McCay mean 60% rather than 16%? Or is it a PR stunt? Or what?

In a recent CBS segment prefacing the SuperBowl (https://www.youtube.com/watch?v=GRuTxJMWiTg), it is argued that by lowering the price of concession food, the Atlanta Falcons not only made their fans ...
0
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1answer
34 views

How has my profit margin risen?

I quote the first few paras. of this Reddit comment: [1.] Imagine you had a business selling lollipops at school. Since you can buy a bag of 100 for \$10, you can sell them for 25¢ a piece for a ...
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1answer
22 views

Can implicit costs be negative?

I think that conventionally implicit costs are positive but if for example we consider a negative interest rate as an implicit cost, the implicit cost would be negative. Is this true? Can implicit ...
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2answers
50 views

In perfect competition, why is there economic loss if marginal cost > marginal revenue?

Here's a graph for reference: In the left graph, I read from a book (CFA L1 notes) that At any output above the quantity where $MR = MC$, the firm will be generating losses on its marginal ...
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1answer
56 views

The relationship between gross profit and tax

I tried to do following question but I am not sure about my solution. Please tell me your opinions Since gross profit is strictly concave, I can say that $R’’(y)-C’’(y) <0$ Now I maximize the ...
0
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1answer
66 views

What famous company that turned a loss at its first year(s) but then became profitable? [closed]

In a discussion with a friend, he mentioned that a new company may fail to gain profits for several years before it becomes profitable. I asked him for examples but he did not know any. I though of ...
1
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1answer
66 views

Why is investment not a cost in firms profit functions?

In all textbooks I've seen profits is written as: $$\pi=py-wL-rK$$ It is evident here that w and r are operational costs. But unless there is no depreciation and the level of capital is to remain ...
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1answer
49 views

When big companies invest on a new idea/product?

I am graduated in AI field. I love robotics and intelligent systems, so I worked on some new products by myself at home that have new ideas and are interesting(at least me and my friends think!). I ...
0
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1answer
80 views

Why wasn't the wage of the entrepreneur included in explicit costs?

I was solving an economic problem (I was calculating explicit and implicit costs) and noticed one interesting thing: In the said problem, the entrepreneur set himself the wage of 10 000 rubles AND in ...
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1answer
34 views

Capital mobility across industries and equalization of profit rates

What are some restrictions to the competitive restoration of proportionality across industries in regards to capital mobility? What is generally impeding the free flow of capital from less profitable ...
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2answers
139 views

Marginal productivity, wages, and profits in neoclassical economics

In neoclassical economics a worker is paid the marginal product of what they produce. If this is true then what is the source of profits?
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1answer
1k views

Why is ATC tangent to Demand in a Monopolistic or Mopolistically Competitive Firm Making Zero Profit?

I understand that the Average Total Cost is equivalent to demand in a zero profiting monopoly or monopolistically competitive firm in order for there to be zero profits (when ATC = P at a given ...
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2answers
682 views

USA seigniorage revenue

I came to know about the term seigniorage meaning the difference between the value of money and the cost to produce it. I also read somewhere that many countries use seigniorage as a means of revenue ...
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1answer
73 views

The difference between making money by profit and by earning it [closed]

Suppose there were no taxes (which only makes things more complicated) and suppose I ask ten people if they want to get money by cleaning up houses for 8 euros per hour. They agree. Now I on my turn ...
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3answers
71 views

Why does BC Hydro want us to use less power?

I live in British Columbia, Canada, and we have a hydro electric company called BC hydro that supplies our power. They run ads encouraging us to use less power. I have been wondering why they would do ...
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0answers
45 views

Find change in gross profit after price change

How do you solve this question? A company has 3 products. They contribute to 30%, 30% and 40% of sales respectively. They have profit margins of 15%, 30%, and 50% respectively. If the ...
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3answers
107 views

Does the price level in a competitive market have to be at the intersection of the Average Cost curve and the Marginal Cost curve?

I could see that if the price level is say lower than the intersection point , then firms won't be able to operate , but what is wrong with the price level being above the intersection point of the ...
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0answers
22 views

Is there a simple way to write a model with firms/sectors with different demand elasticities?

I would like to write down a model where there are firms with different demand elasticities: For some firm's total profits increase and decrease a lot with increases and decreases in demand for their ...
0
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1answer
66 views

Why does state-owned company so aggressive in making profit?

Take China National Petroleum Corporation(CNPC) as an example, almost 86% of its stock is stated-owned. Its senior managers' promotion are related to the company's profit. And since there are ...
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2answers
1k views

Optimize by MR = MC vs TR = TC

I know that I should optimize production by solving $MR = MC$ with respect to $Q$. But if $TR > TC$, I am making a profit. Why is not enough to just solve $TR = TC$ with respect to $Q$?
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1answer
52 views

Monopoly Profits [closed]

Have a question: In the town of Johnson, there are 100 identical citizens and one bus company. The bus company is owned by the citizens, each of whom receives 1% of the bus company’s profits. Nobody ...
3
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2answers
337 views

Total profit greater than 100 %

Newspapers like Forbes, CNet, WSJ and many other say that it is possible to have total profit of industry more than 100 %. Examples: Apple and Samsung account for more than 100% of industry ...
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0answers
42 views

How do organisations diversify? Determinants of choosing new target industries

A very weird question I agree. I am interested in understanding the motives behind firm behaviours of diversification. Why would some firms choose new target sectors/activities? Is there any ...
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0answers
46 views

Profit-Margins in the NK Model

How do profit margins vary over "business cycles" in the new Keynesian model? I'm interested in responses of profit margins (actual price markups) to all three standard shocks in NK models: - TFP ...
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5answers
481 views

Why (neoclassical) economic models have no profits, unlike the real world?

Consider a simple neoclassical model of an economy populated by firms with a constant returns to scale production function, using homogeneous labour and capital. Firms are equal, and are price takers ...
5
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1answer
344 views

Are profits procyclical?

This is somewhat related, but distinct from Cyclicality of Markups Basically, I'm looking for papers on whether firms profits are (on average) procyclical or not, and I appreciate theoretical, but ...