Homework Answers
No, in the short run the perfectly competitive firms will maximise the profit at the point where the MC and the price are equal, that point can be above the lowest point of the ATC, here, the firm can produce at this point when the demand increase and the existing firm makes a profit, it can be below ATC as well when the firm is facing a loss in the market.
IN the long run it is not possible because if the firm is producing above the lowest point of ATC that means they are making a profit and it will attract more firms and decrease the profit and price. It will continue to the point where the ATC and the Price are equal. and at the lowest point of ATC.
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if a specific tax is collected from only one competitive firm, how should that firm change...
if
a specific tax is collected from only one competitive firm, how
should that firm change its output level to maximize its profit,
and how does its maximum profit change?
E4. (20 points) If a specific tax of 1 is collected from only one competitive form, - How should that firm change its output level to maximize its profit,and how does its maximum profit change?
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1. What type of demand curve does a perfectly competitive firm face? Why? 2. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $150. Output FC VC TC TR Profit/Loss 0 $100 $ 0 ___ ___ ___ 1 100 100 ___ ___ ___ 2 100 180 ___ ___ ___ 3 100 ...
1.) What is the main difference between a competitive firm and a monopoly? a. A competitive...
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A monopolistically competitive firm that wishes to maximize profits will choose to produce that level of output...
A monopolistically competitive firm that wishes to maximize profits will choose to produce that level of output where: Price of the good is equal to the marginal revenue of producing the last unit of the good Price of the good is equal to the marginal cost of producing the last unit of the good. Marginal revenue is equal to marginal cost. ATC is at the lowest point possible. An industry has eight firms with the following market shares: 5%, 20%,...
Question 1. A perfectly competitive firm seeking to maximize its profits would want to maximize the...
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Sonya and Leah operate a small firm in a perfectly competitive market, the diagram illustrates its...
Sonya and Leah operate a small firm in a perfectly competitive
market, the diagram illustrates its MC, ATC, AVC and MR
curves.
1. What is their current average revenue per unit?
2. What is their profit maximizing level of output and
profit?
3. If the market clearing price drops to $10.00 per unit,
should they continue to produce in the short run if they wish to
maximize their economic profits (or minimize its economic losses)?
Explain.
4. What is their...
1. A perfectly competitive firm sells its product for $360/unit and has an average total cost...
1. A perfectly competitive firm sells its product for $360/unit and has an average total cost function given by: ATC(Q) = 1000/Q + 30 + 1.5Q. a. What are this firm’s fixed costs? Explain. b. Determine this firm’s profit maximizing level of output. c. Calculate this firm’s profits. 2. A perfectly competitive firm sells its product for $200/unit and has a total cost of production given by: C(Q) = 1500 + 40Q+5Q2 . a. What are this firm’s fixed costs?...
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To maximize profit, a price taker will expand its output as long as the sale of...
To maximize profit, a price taker will expand its output as long as the sale of additional units adds more to revenues (marginal revenues) than to costs (marginal costs). Therefore, the profit-maximizing price taker will produce the output level at which marginal revenue (and price) equals marginal cost. In a price-taker market, if a business produces efficiently (i.e., that is, where marginal revenues = marginal costs), the firm will be able to make at least a normal profit. True of...
if
a specific tax is collected from only one competitive firm, how
should that firm change its output level to maximize its profit,
and how does its maximum profit change?
E4. (20 points) If a specific tax of 1 is collected from only one competitive form, - How should that firm change its output level to maximize its profit,and how does its maximum profit change?
A monopolistically competitive firm that wishes to maximize profits will choose to produce that level of output where: Price of the good is equal to the marginal revenue of producing the last unit of the good Price of the good is equal to the marginal cost of producing the last unit of the good. Marginal revenue is equal to marginal cost. ATC is at the lowest point possible. An industry has eight firms with the following market shares: 5%, 20%,...
Sonya and Leah operate a small firm in a perfectly competitive
market, the diagram illustrates its MC, ATC, AVC and MR
curves.
1. What is their current average revenue per unit?
2. What is their profit maximizing level of output and
profit?
3. If the market clearing price drops to $10.00 per unit,
should they continue to produce in the short run if they wish to
maximize their economic profits (or minimize its economic losses)?
Explain.
4. What is their...
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