In the short run, a perfectly competitive firm might earn negative economic profits and then decide to shut down. On a graph, show this situation, using marginal revenue, marginal cost, average-total-cost, and average-variable-cost curves. Indicate the level of output at which the firm will no longer produce. Explain why your graph shows the shut down point.
Under a perfect competition a firm would shut down if it is not able to cover even the variable cost to continue production activities.
In the short run, a perfectly competitive firm might earn negative economic profits and then decide...
The following graph shows the demand and cost curves for a perfectly competitive firm. The profit-maximizing firm will: MC ATC // AVC Multiple Choice shut down. ο produce with short-run losses. O produce with long-run economic profits. ο produce with short-run economic profits.
The demand curve for a perfectly competitive firm options: is upward sloping. is perfectly horizontal. is perfectly vertical. maybe downward or upward sloping, depending upon the type of product offered for sale. In the short run, the best policy for a perfectly competitive firm is to Question 17 options: shut down its operation if the price ever falls below average total cost. produce and sell its product as long as price is greater than average variable cost. shut down its...
In the short run, the perfectly competitive firm will continue to produce even though it might experience an economic loss if: a.total cost exceeds marginal cost. b.the market price exceeds the average variable cost. c.total revenue exceeds total costs. d.the market price exceeds the average fixed cost.
Consider the graph below. Suppose that a firm in a competitive market has the cost curves shown in the graph. If the market price falls below $4.50, the firm will earn zero economic profits in the short run and shut down. positive economic profits in the short run. zero economic profits in the short run run but remain in business. negative economic profits in the short run but remain in business. negative economic profits in the short run and shut...
4. Deriving the short-run supply curve Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run....
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...
In the short run, a perfectly competitive firm is producing where MR-MC. At this output, P>AVC and P>ATC. This firm A) is making positive economic profits B) is making zero economic profits C) is making negative economic profits but should continue to operate D) is making negative economic profits and should shut down.
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic profits. negative economic profits. Positive, zero, or negative economic profits. QUESTION 8 Which of the following statements best describes firms under monopolistic competition? Profits will be positive in the long run. Price always equals average variable cost. In the long run, positive economic profit will be eliminated. Marginal revenue equals minimum average total cost in the short run. QUESTION 9 Which of the following...
2. Each of the following situations could exist for a perfectly competitive firm in the short run. In each case, explain whether the firm should produce in the short run, shut down in the short run, or whether additional information is needed to determine what it should do. a. Total costs exceed total revenue at all output levels. (4 pts) b. Marginal revenue exceeds marginal cost at the current output level. (4 pts) C. Price exceeds average total cost at...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...