Homework Answers
In a perfectly competitive market a firm earns zero economic profit in longrun. The demand curve D0 is the longrun equilibrium of the market where the equilibrium quantity is Q0. The price is equal to the average total cost. MR0=P0 (where MC=MR0=AR0).
It is the changes in demand in shortrun that cause profit earning and loss suffering situation to the firm. In shortrun, if the market demand curve shifts to D1, with the given supply, the market price increase to P1 which gives revenue above the average total cost of the firm which is indicated by the gap between MR1 and ATC at the level of output q1.
In longrun, new firms will enter into the market which causes a downward shift in supply curve to the right which results the industry output to increase to Q2 and price falls to P0 where the firms earn only zero economic profit (normal).
Answer: C. earns positive economic profit in the shortrun.
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Supply Price 89 Price ATC - MR1 MRO Q0...
please explain answer thank you Price Supply MC Price ATC I MR1 MRO Q0 01 02...
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Price Supply MC Price ATC I MR1 MRO Q0 01 02 Market Quantity 90 91 92 Firm Quantity 40. Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from Do to Di, in the short run: A. market price rises from Po to P, and the firm's output rises from qo to qı. B. market price rises from Po to P, and the firm's output rises from...
Industry Firm /МC P P So ATC -P1=MR1 18 14.2 14 Po=MRo 9.6 о 10 20 24 800 900 1,000 Answer the following questions base...
Industry Firm /МC P P So ATC -P1=MR1 18 14.2 14 Po=MRo 9.6 о 10 20 24 800 900 1,000 Answer the following questions based off of the graphs above, which depict a perfectly competitive industry and firm: Suppose the industry or market is initially in equilibrium at point A Where will the firm choose to operate and what are the economic profits (losses) at that point? OQ-24; Economic profits= $4 O Q-20; Economic profits- $0 O Q=24; Economic profits-...
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...
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Industry Firm МС P So АТСC S1 b 18 -P1=MR1 14.2 14 Po=MRo 9.6 Do Q 10 20 24 800 900 1,000 Answer the following questions based off of the graphs above, which depict a perfectly competitive industry and firm: If the industry or market is in equilibrium at point C, where will the firm choose to operate and what are the economic profits (losses) at that point? Why did the economic profits (losses) change compared to when the market...
8. Refer to the graph above depicting a perfectly competitive firm. When maximizing profit, the total...
8. Refer to the graph above depicting a perfectly competitive firm. When maximizing profit, the total profit earned by the firm represented is: A. $220. B. $275. C. $330 D. $605, 26. Refer to the graph above of a monopolistically competitive firm. If the firm maximizes profit, it will earn: A. zero economic profit this year. B. $320,000 economic profit this year. C. 584,000 economic profit this year. D. $56,000 economic profit this year. ATC AVC - 01 02 03...
ATC en Price (per unit) в - Market Price P=MR В /С Quantity (units per week)...
ATC en Price (per unit) в - Market Price P=MR В /С Quantity (units per week) Figure 23.6 Refer to Figure 23.6 for a perfectly competitive firm. Assuming that points A, B, C and D are all above AVC, this firm will maximize profits by producing the level of output that corresponds to point 11). C A) A. B) B. CC. D) D.12) Refer to Figure 23.6 for a perfectly competitive firm. If this firm produces the level of output...
Industry Firm /МC P So ATC -Pi-MR 18 14.2 14 Po MRo 9.6 о 10 20 24 800 900 1,000 Answer the following question based of...
Industry Firm /МC P So ATC -Pi-MR 18 14.2 14 Po MRo 9.6 о 10 20 24 800 900 1,000 Answer the following question based off of the graphs above, which depict a perfectly competitive industry and firm: If the industry or market is in equilibrium at point B, where will the firm choose to operate and what are the economic profits (losses) at that point? O Q-900; Economic profits-$80 O Q=900; Economic profits-$96 O Q=24; Economic profits-$91.2 O Q-20;...
Given market demand of D and a short-run supply of s2 in the diagram below, this...
Given market demand of D and a short-run supply of s2 in the diagram below, this fim would Market Firm MC ATC AVC Pt MR1 P2 MR2 Q1 Q 1 q2 O A. Increase its price to P1 in order to earn a normal profit and remain in the industry. ⓔ B, face a marginal revenue schedule of MRI and produce q2 to maximize its profits. O C. face a marginal revenue schedule of MR1 and produce q1 to maximize...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC),...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC), and long-run average cost (LATC) curves of a typical perfectly competitive firm that uses only labour and physical capital to produce its product and the current market price (PⓇ). S/unit MC ATC LATC B Pa E Q1 Q2 Quantity a) How many units of output would the firm choose to produce in the short run? Explain. b) Is the firm making an economic profit...
MC ATC MC ATC -D MR MR 0 0 (b) MC ATC D MR (c) 65....
MC ATC MC ATC -D MR MR 0 0 (b) MC ATC D MR (c) 65. Refer to the above diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by: A) diagram a only. B) diagram b only. C) diagram conly. D) both diagrams a and c. 66. Refer to the above diagrams, which pertain to monopolistically competitive firms. A short-run equilibrium entailing economic profits is shown by: A) diagram a only. B) diagram b...
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Price Supply MC Price ATC I MR1 MRO Q0 01 02 Market Quantity 90 91 92 Firm Quantity 40. Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from Do to Di, in the short run: A. market price rises from Po to P, and the firm's output rises from qo to qı. B. market price rises from Po to P, and the firm's output rises from...
Industry Firm /МC P P So ATC -P1=MR1 18 14.2 14 Po=MRo 9.6 о 10 20 24 800 900 1,000 Answer the following questions based off of the graphs above, which depict a perfectly competitive industry and firm: Suppose the industry or market is initially in equilibrium at point A Where will the firm choose to operate and what are the economic profits (losses) at that point? OQ-24; Economic profits= $4 O Q-20; Economic profits- $0 O Q=24; Economic profits-...
Industry Firm МС P So АТСC S1 b 18 -P1=MR1 14.2 14 Po=MRo 9.6 Do Q 10 20 24 800 900 1,000 Answer the following questions based off of the graphs above, which depict a perfectly competitive industry and firm: If the industry or market is in equilibrium at point C, where will the firm choose to operate and what are the economic profits (losses) at that point? Why did the economic profits (losses) change compared to when the market...
8. Refer to the graph above depicting a perfectly competitive firm. When maximizing profit, the total profit earned by the firm represented is: A. $220. B. $275. C. $330 D. $605, 26. Refer to the graph above of a monopolistically competitive firm. If the firm maximizes profit, it will earn: A. zero economic profit this year. B. $320,000 economic profit this year. C. 584,000 economic profit this year. D. $56,000 economic profit this year. ATC AVC - 01 02 03...
ATC en Price (per unit) в - Market Price P=MR В /С Quantity (units per week) Figure 23.6 Refer to Figure 23.6 for a perfectly competitive firm. Assuming that points A, B, C and D are all above AVC, this firm will maximize profits by producing the level of output that corresponds to point 11). C A) A. B) B. CC. D) D.12) Refer to Figure 23.6 for a perfectly competitive firm. If this firm produces the level of output...
Industry Firm /МC P So ATC -Pi-MR 18 14.2 14 Po MRo 9.6 о 10 20 24 800 900 1,000 Answer the following question based off of the graphs above, which depict a perfectly competitive industry and firm: If the industry or market is in equilibrium at point B, where will the firm choose to operate and what are the economic profits (losses) at that point? O Q-900; Economic profits-$80 O Q=900; Economic profits-$96 O Q=24; Economic profits-$91.2 O Q-20;...
Given market demand of D and a short-run supply of s2 in the diagram below, this fim would Market Firm MC ATC AVC Pt MR1 P2 MR2 Q1 Q 1 q2 O A. Increase its price to P1 in order to earn a normal profit and remain in the industry. ⓔ B, face a marginal revenue schedule of MRI and produce q2 to maximize its profits. O C. face a marginal revenue schedule of MR1 and produce q1 to maximize...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC), and long-run average cost (LATC) curves of a typical perfectly competitive firm that uses only labour and physical capital to produce its product and the current market price (PⓇ). S/unit MC ATC LATC B Pa E Q1 Q2 Quantity a) How many units of output would the firm choose to produce in the short run? Explain. b) Is the firm making an economic profit...
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