ZuoTi.Pro
Question

Kuzco runs a company that is part of a perfectly competitive market. He is thinking about...

Kuzco runs a company that is part of a perfectly competitive market. He is thinking about decreasing his prices, hoping it will increase his profits in the long run. Knowing you have taken an economics course, he asks you for advice. What should you tell him? Briefly explain your answer.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

According to the standard economic principles, in a perfectly competitive market, in the long run, there are indeed optimal firms in the market such that the total supply equals the total demand and the firms will get to earn normal profit or zero profit. Therefore according to it, firm in a perfect competition cannot earn normal profit all in al. Therefore, the advice is that he should go at market rates to sustain in perfect competition market.

0 0
Add a comment
Know the answer?
Add Answer to:
Kuzco runs a company that is part of a perfectly competitive market. He is thinking about...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose the market for wheat is perfectly competitive. Suppose further the long-run supply curve in this...

    Suppose the market for wheat is perfectly competitive. Suppose further the long-run supply curve in this market is increasing. Explain briefly if and how each of the following varies as market quantity increases: i) The number of firms ii) Input prices iii) Long-run profits Suppose firms in a monopoly competitive market produce their profit-maximizing quantity, and their average total cost equals their marginal revenue. Should firm entry or exit in the long run?

  • Please help with these questions Question 21 0.4 pts The market for candles is perfectly competitive...

    Please help with these questions Question 21 0.4 pts The market for candles is perfectly competitive and is currently in equilibrium. What will happen if candles are later linked to more houses catching on fire? In the short run, firms will incur economic losses, but in the long run, firms will enter the market, bringing economic profits back up to zero In the short run, firms will experience economic profits, but in the long run, firms will enter the market,...

  • 31 In perfectly competitive industries: A. the shont-run market supply curves are positively sloped в. long-rusniustry...

    31 In perfectly competitive industries: A. the shont-run market supply curves are positively sloped в. long-rusniustry supply curve,are positively sloped. C. the short-run D. All of the above E. Only B and C are correct market supply curves are more clastic than the long-run industry supply curvers s3. Assame a perfectly-competitive, increasing-cost industry composed of identical firms is initially in long-run equilibrium. Given a decrease in demand, in the short ran: equilbrium price decreases, equilibrium output increases, the output of...

  • Assume that Firm A currently operates in a perfectly competitive market with positive profits. In the...

    Assume that Firm A currently operates in a perfectly competitive market with positive profits. In the long run, there is inflow of new firms causing the total market supply to ___. Meanwhile, Firm A will ___ its output in response to decrease in market price. Increase; increase Increase; decrease Decrease; decrease Decrease; increase

  • In the long run, a firm in a perfectly competitive market earns zero economic profit, so...

    In the long run, a firm in a perfectly competitive market earns zero economic profit, so the opportunity in the short run to enjoy positive economic profits will cause existing firms to increase output and new firms to enter the market.

  • 27. If there is an increase in market demand in a perfectly competitive market, then in...

    27. If there is an increase in market demand in a perfectly competitive market, then in the short run a. there will be no change in the demand curves faced by individual firms in the market. b. the demand curves for firms will shift downward. c. the demand curves for firms will become more elastic. d. profits will rise. answer and why. thank you

  • Suppose the market for canola oil is perfectly competitive. There are 1,000 firms in the market,...

    Suppose the market for canola oil is perfectly competitive. There are 1,000 firms in the market, each of which have a fixed cost of FC=2 and a marginal cost of MC= 1+Q, where q is quantity produced by an individual firm. Let QS denote the total quantity supplied in the market. The market demand is QD= 15,250-250P A) Find the market supply equation, that is write QS as a function of price P B)What is the equilibrium price? What is...

  • For a perfectly competitive market made up of firms represented in the graph below, what is...

    For a perfectly competitive market made up of firms represented in the graph below, what is the long run equilibrium price of the good? Cost ($) MC ATC AVC $16 $14 $12 $10 Quantity $14 $10 $12 $16 For a perfectly competitive market made up of firms represented in the graph below, if the price is $14, Cost ($) MC ATC $16 AVC - $14 $12 $10 Quantity The firm is operating at its minimum long run average total cost....

  • A friend of yours who plays competitive soccer comes to you and asks what supplements he...

    A friend of yours who plays competitive soccer comes to you and asks what supplements he should consume. He says he often feels tired, and so, was thinking about trying ginseng. 1. What would you would want to assess first in terms of his tiredness? 2. What would you advise him in terms of ginseng? 3. He also heard that consuming sodium bicarbonate before performance may decrease lactic acid. He asks if he should consume it, and if so, in...

  • You are a manager in a perfectly competitive market. The price in your market is $35....

    You are a manager in a perfectly competitive market. The price in your market is $35. Your total cost curve is C(Q) = 10 + 2Q + .5Q2 and MC = 2 + Q. a. What level of output should you produce in the short run? b. What price should you charge in the short run? c. Will you make any profits in the short run? d. What will happen in the long run?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT