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Many small businesses do not earn an economic profit

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1. Many small businesses do not earn an economic profit. Why do they stay in business?

2. A firm is considering adding an addition to their factory. The firm will need to borrow the money at 7% interest. The investment will earn a 5% rate of return. Should the firm add the addition? Explain.

3. Are all fixed costs also sunk costs? Explain.

Reference no: EM131482636

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