Question

1 Lehman Brothers is a very well-known financial firm that has filed for Chapter 11 bankruptcy protection during 2008/2009 financial crisis. Then the economic situation was so bad the 135 years old firm that survived during 1930 great depression was unable to survive and ceased the operation and never return to market. In your ECON 200 class, you learnt the conditions at which the firms enter and exit from the market. Using a graph describes how and when in a perfectly competitive market the firms that are experiencing economic losses exit from the market. In the graph you may use costs and revenue curves

2 On the other hand, the General Motors went on a different direction. General Motors was founded in 1908 and one hundred years old company. Following the financial crisis in 2008/2009, General Motors filed for chapter 11 bankruptcy protection. After support from the US government and restructuring, the business operation was able to re-enter the market. In your ECON 200 class you learnt the conditions at which the firms enter and exit from the market. Using a graph describes how and when in a perfectly competitive market the firms that are experiencing economic losses close the operation and reenter to the market. In the graph you may use costs and revenue curves.

Answer 1

Answer:-

Lehman Brothers is a very notable financial firm. But it couldn't continue in 2008 financial crisis. in the short-run confronting a crisis can be overseen in the event that it is covering the AVC with a desire for getting recouped in the long future.

Yet, the enormous financial crisis drives the company into a position where the AVC likewise remained over the market value which is the sign for the company to leave the market.

A perfectly Competitive firm shutdown ,when its total income is lower than total variable cost.Or at the end of the day , total loss is higher than total fixed cost.

At the point when cost goes beneath or equivalent to Minimum purpose of normal variable cost,then firm total loss is higher than total cost and firm shutdown to lessen their loss.

Below the graph to explain how and when in a perfectly competitive market the firms that are experiencing economic losses close the operation and reenter to the market.