This question is in regards to situations that might face a perfectly competitive firm. Draw two...
This question is in regards to situations that might face a perfectly competitive firm.
Draw two graphs. On the first, show the short-run profit maximizing output of an individual firm earning an economic profit, including MR, MC, AVC, and ATC. On the second, show the short-run market equilibrium price and quantity. Explain how the industry supply curve and the market equilibrium price and quantity are determined.
Homework Answers
The perfectly competitive firm maximizes profit by equating P=MC at equilibrium. Then each firm supply curve is its MC curve above the minimum ATC. The industry supply curve is the summation of all the individual supply curve of the existing firms in the industry.
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This question is in regards to situations that might face a
perfectly competitive firm.
Draw two...
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual...
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual firm earning an economic profit, including MR, MC, AVC, and ATC. On the second, show the short-run market equilibrium price and quantity. Explain how the industry supply curve and the market equilibrium price and quantity are determined. 2. What is the relationship between the price on the two graphs? Why does this relationship exist? 3. Explain why a firm in a perfectly competitive industry...
8. A perfectly competitive firm is earning an economic profit. In the short run it should...
8. A perfectly competitive firm is earning an economic profit. In the short run it should In the long run it should A. shut down; expand B. produce where MC = MR; leave the industry C. produce where MC = MR; expand production D. shut down; exit the industry 9. In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC? A. P> MC and...
Assume that the following conditions exist for a perfectly competitive firm: price = $8.50, current output...
Assume that the following conditions exist for a perfectly competitive firm: price = $8.50, current output = 100 units, ATC at current output = $9.00, AVC at current output = $8.00, total fixed costs =$100 and MC at current output = $8.00. a. Is the firm earning any economic profit currently? How much is its profit or loss? b. Is the firm maximizing its economic profit? What should the firm do to maximize profit or minimize loss? c. Given your...
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...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice O is equal to its total variable costs. O O ь is zero. гето. O is equal to its total fixed costs. cannot be determined. Refer to the diagrams, which show the demand and cost curves for a perfectly competitive firm producing output and the demand and supply curve for the industry in which it operates. Which of the following is correct? ATC AVC...
1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC...
1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC ا أ ا 1 2 3 4 5 6 7 8 Quantity Suppose the current price is $6. What will happen in the long run? O Nothing will happen in the long run. The firm is earning zero economic profit. O Since the firm is earning a positive economic profit, there is an incentive for new firms to enter the industry in the long...
Use the following graphs for a perfectly competitive market in the short run to answer the...
Use the following graphs for a perfectly competitive market in the short run to answer the next question. P MC ATC D MR Which of the following statements is true? Multiple Choice The firm is generating a loss. The firm should increase production in the short run. The firm is earning a normal profit The firm is making economic profits.
Question: These diagrams, pertain to a perfectly competitive firm producing output q and the industry in...
Question: These diagrams, pertain to a perfectly competitive firm producing output q and the industry in which it operates. What should we expect in the long run on the number of firms, market supply and equilibrium price? MC ATC AVC MR P
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram...
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram illustrates its MC, ATC, AVC and its MR curves. ATC 16.00 MR a. What is their current average revenue per unit? [1 mark] 12.25 12.00 F 10.00 ---- Price and Cost ($ per unit) 0.00 6.00 b. What is their profit maximizing level of output and profit? (2 marks] 10 11 12 13 Output Per hour c. If the market clearing price drops to...
A limitation of the perfectly competitive market structure is that potential new entrants generally face barriers...
A limitation of the perfectly competitive market structure is that potential new entrants generally face barriers to market entry. True False In a perfectly competitive scenario, determine(s) the market price. a dominant producer O market supply and demand individual producers In a perfectly competitive scenario, a firm's marginal revenue is equal to price, so the profit-maximizing quantity is where P = MC. True O False If, in a perfectly competitive market, P = (a firm's) ATC, then the firm: earns...
8. A perfectly competitive firm is earning an economic profit. In the short run it should In the long run it should A. shut down; expand B. produce where MC = MR; leave the industry C. produce where MC = MR; expand production D. shut down; exit the industry 9. In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC? A. P> MC and...
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...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice O is equal to its total variable costs. O O ь is zero. гето. O is equal to its total fixed costs. cannot be determined. Refer to the diagrams, which show the demand and cost curves for a perfectly competitive firm producing output and the demand and supply curve for the industry in which it operates. Which of the following is correct? ATC AVC...
1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC ا أ ا 1 2 3 4 5 6 7 8 Quantity Suppose the current price is $6. What will happen in the long run? O Nothing will happen in the long run. The firm is earning zero economic profit. O Since the firm is earning a positive economic profit, there is an incentive for new firms to enter the industry in the long...
Use the following graphs for a perfectly competitive market in the short run to answer the next question. P MC ATC D MR Which of the following statements is true? Multiple Choice The firm is generating a loss. The firm should increase production in the short run. The firm is earning a normal profit The firm is making economic profits.
Question: These diagrams, pertain to a perfectly competitive firm producing output q and the industry in which it operates. What should we expect in the long run on the number of firms, market supply and equilibrium price? MC ATC AVC MR P
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram illustrates its MC, ATC, AVC and its MR curves. ATC 16.00 MR a. What is their current average revenue per unit? [1 mark] 12.25 12.00 F 10.00 ---- Price and Cost ($ per unit) 0.00 6.00 b. What is their profit maximizing level of output and profit? (2 marks] 10 11 12 13 Output Per hour c. If the market clearing price drops to...
A limitation of the perfectly competitive market structure is that potential new entrants generally face barriers to market entry. True False In a perfectly competitive scenario, determine(s) the market price. a dominant producer O market supply and demand individual producers In a perfectly competitive scenario, a firm's marginal revenue is equal to price, so the profit-maximizing quantity is where P = MC. True O False If, in a perfectly competitive market, P = (a firm's) ATC, then the firm: earns...
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