. Discuss why a company under a perfectly competiive market structure should continue to operate in...
. Discuss why a company under a perfectly competiive market structure should continue to operate in the short-run when price is at least equal to the average variable cost.
Homework Answers
In the short run there exist fixed costs which have to be borne even when the production level is zero. So when the firm is able to cover variable cost it should produce because the loss incurred by producing would be at least less than the cost incurred by shutting down.
Add Answer to:
. Discuss why a company under a perfectly competiive market
structure should continue to operate in...
Discuss why a company under a perfectly competitive market structure should continue to operate in the...
Discuss why a company under a perfectly competitive market structure should continue to operate in the short=run price is at least equal to the average variable cost.
Thanks in advance 4) Explain why a firm should continue to operate in the short run...
Thanks in advance
4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.
1) The farmer sells apples in a perfectly competitive market at a price of $1/pound. The...
1) The farmer sells apples in a perfectly competitive market at a price of $1/pound. The farmer's marginal cost, average total cost, and average variable cost curve can be represented by the following MC price ATC AVC d-MR Should the farmer continue to operate in the short run? A) No B) Can't be determined using the information provided C) Yes
8. In the short run, a perfectly competitive firm will shut down if it is producing...
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...
XYZ company operates in a perfectly competitive market where the current market price is $10. Currently...
XYZ company operates in a perfectly competitive market where the current market price is $10. Currently the firm is producing 200 units at an average variable cost of $8, an average total cost of $12 and a marginal cost of $10. a. Is the situation described above a short-run equilibrium for XYZ? Explain. b. What is XYZ’s profit/loss? c. What is XYZ’s producer surplus? d. Should XYZ continue to produce in this situation? Explain. e. Assuming that XYZ is ‘average’...
XYZ company operates in a perfectly competitive market where the current market price is $10. Currently,...
XYZ company operates in a perfectly competitive market where the current market price is $10. Currently, the firm is producing 200 units at an average variable cost of $8, and average total cost of $12 and a marginal cost of $10. (2) is the situation described above a short-run equilibrium for XYZ? Explain. (2) what is XYZ's profit loss? (2) What is XYZ's producer surplus? (2) Should XYZ continue to purchase in this situation? Explain (2) Assuming that XYZ is...
In the short run, the perfectly competitive firm will continue to produce even though it might...
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.
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 $10.00 per unit,
should they continue to produce in the short run if they wish to
maximize their economic profits (or minimize its economic losses)?
Explain.
4. What is their...
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram...
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram illustrates its MC, ATC, AVC and its MR curves. ATC 16.00 MR a. What is their current average revenue per unit? [1 mark] 12.25 12.00 F 10.00 ---- Price and Cost ($ 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...
Suppose a perfectly Competitive firms minimum average variable cost is $1 when it produces 50. If...
Suppose a perfectly Competitive firms minimum average variable cost is $1 when it produces 50. If the price is $2 and the firm's marginal cost is $2 the firm should Continue to produce, but produce less than 50 Continue to operate, but produce more than 50 Shut down Continue to produce 50 To maximize economic profit of perfectly competitive firm: will sell its goods below the market price all of the above will sell its goods above the market price...
Thanks in advance
4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.
1) The farmer sells apples in a perfectly competitive market at a price of $1/pound. The farmer's marginal cost, average total cost, and average variable cost curve can be represented by the following MC price ATC AVC d-MR Should the farmer continue to operate in the short run? A) No B) Can't be determined using the information provided C) Yes
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...
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 $10.00 per unit,
should they continue to produce in the short run if they wish to
maximize their economic profits (or minimize its economic losses)?
Explain.
4. What is their...
Question 3 Tabassum and Shashwat operate a small firm in a perfectly competitive market, the diagram illustrates its MC, ATC, AVC and its MR curves. ATC 16.00 MR a. What is their current average revenue per unit? [1 mark] 12.25 12.00 F 10.00 ---- Price and Cost ($ 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...
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