Relate opportunity costs to why profits encourage entry into purely competitive industries and how losses encourage...
Relate opportunity costs to why profits encourage entry into purely competitive industries and how losses encourage exit from purely competitive industries.
Homework Answers
If the firm in the competitive market is making a profit and a firm is not In the industry then the opportunity cost of joining that industry increases i.e. higher the profit the firm in the industry are making the higher the opportunity cost will be, so a firm will enter the market to earn an extra profit, if there is loss in the industry then the opportunity cost of other industries that are making a profit increases and the firm will get a better profit opportunities in other market so they will exit this industry and switch to other industries.
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Relate opportunity costs to why profits encourage entry into
purely competitive industries and how losses encourage...
1) Compared with a purely competitive industry, a monopolist produces a. more output at a lower...
1) Compared with a purely competitive industry, a monopolist produces a. more output at a lower price. b. less output at a higher price. c. more output at a higher price. d. less output at a lower price. 2) Which one of the following statements about monopoly firms and firms in a purely competitive industry is true? a. In the long run, monopoly firms and firms in a purely competitive industry operate at the minimum point of their average total...
In the long run in a purely competitive industry, (select only one correct answer). entry and...
In the long run in a purely competitive industry, (select only one correct answer). entry and exit of firms can occur. firms do not have sufficient time to liquidate their assets. plant size is fixed. the industry is composed of a specific number of firms.
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry,...
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? The price per bushel of corn will continue to increase, yielding higher profits. Thus more firms will enter the market indefinitely. Profits will become negative due to over farming, which will result in the...
Adam Smith and the Natural Price Adam Smith explained how economic profits and losses in a competitive market cause the...
Adam Smith and the Natural Price Adam Smith explained how economic profits and losses in a competitive market cause the entry and exit of firms. Smith described what he called the natural price, or the long-run equilibrium price, in this passage from his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations: When the price of any commodity is . . . sufficient to pay the rent of land, the wages of labour, and the...
5. Explain the role played by profits, entry, and exit in determining a competitive industry run...
5. Explain the role played by profits, entry, and exit in determining a competitive industry run equilibrium.
The graph presents the costs and revenue for a perfectly (purely) competitive firm, where the market...
The graph presents the costs and revenue for a perfectly (purely) competitive firm, where the market price is equal to $600 per unit of output. This firm has a fixed cost equal to $3,600. Use this information to determine the optimal output and profit for this firm. What is the optimal output of this perfectly (purely) competitive firm? (Round your answer to the nearest whole number.) Cost and revenue $2400 2200 2000 1800 Average 1600 total cost Marginal cost Average...
Both monopolists and purely competitive firms are assumed to behave as if they seek to maximize...
Both monopolists and purely competitive firms are assumed to behave as if they seek to maximize profits, yet monopoly is held to result in an inefficient allocation of resources as compared to pure competition. Explain. Marginal costs serve as a guide as to how much of a good to produce, while average variable costs help indicate whether to produce at all. Explain. 8 points Why did Professor Snow invest additional resources to make this class an effective one? He could...
QUESTION 6 In the short run, a monopolistically competitive firm. O makes profits just as it...
QUESTION 6 In the short run, a monopolistically competitive firm. O makes profits just as it does in the long run because of barriers to entry O will earn zero economic because of free entry and exit. O produces where MR-MC O produces where PEMC QUESTION 7 In the long run, a monopolistically competitive firm: O makes profits just as it does in the short run because of barriers to entry will earn zero economic because of free entry and...
16. If firms in a monopolistically competitive market are earning positive profits, then a. firms will likely be su...
16. If firms in a monopolistically competitive market are earning positive profits, then a. firms will likely be subject to regulation. b. barriers to entry will be strengthened. c. some firms will exit the market. d. new firms will enter the market. 17. As new firms enter a monopolistically competitive market, profits of existing firms a. rise, and product diversity in the market decreases. b. decline, and product diversity in the market increases. c. rise, and product diversity in the...
Case Study No. 2 Adam Smith and the Natural Price Adam Smith explained how economic profits and losses in a competi...
Case Study No. 2 Adam Smith and the Natural Price Adam Smith explained how economic profits and losses in a competitive market cause the entry and exit of firms. Smith described what he called the natural price, or the long-run equilibrium price, in this passage from his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations: When the price of any commodity is ... sufficient to pay the rent of land, the wages of labour....
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? The price per bushel of corn will continue to increase, yielding higher profits. Thus more firms will enter the market indefinitely. Profits will become negative due to over farming, which will result in the...
The graph presents the costs and revenue for a perfectly (purely) competitive firm, where the market price is equal to $600 per unit of output. This firm has a fixed cost equal to $3,600. Use this information to determine the optimal output and profit for this firm. What is the optimal output of this perfectly (purely) competitive firm? (Round your answer to the nearest whole number.) Cost and revenue $2400 2200 2000 1800 Average 1600 total cost Marginal cost Average...
Both monopolists and purely competitive firms are assumed to behave as if they seek to maximize profits, yet monopoly is held to result in an inefficient allocation of resources as compared to pure competition. Explain. Marginal costs serve as a guide as to how much of a good to produce, while average variable costs help indicate whether to produce at all. Explain. 8 points Why did Professor Snow invest additional resources to make this class an effective one? He could...
QUESTION 6 In the short run, a monopolistically competitive firm. O makes profits just as it does in the long run because of barriers to entry O will earn zero economic because of free entry and exit. O produces where MR-MC O produces where PEMC QUESTION 7 In the long run, a monopolistically competitive firm: O makes profits just as it does in the short run because of barriers to entry will earn zero economic because of free entry and...
16. If firms in a monopolistically competitive market are earning positive profits, then a. firms will likely be subject to regulation. b. barriers to entry will be strengthened. c. some firms will exit the market. d. new firms will enter the market. 17. As new firms enter a monopolistically competitive market, profits of existing firms a. rise, and product diversity in the market decreases. b. decline, and product diversity in the market increases. c. rise, and product diversity in the...
Case Study No. 2 Adam Smith and the Natural Price Adam Smith explained how economic profits and losses in a competitive market cause the entry and exit of firms. Smith described what he called the natural price, or the long-run equilibrium price, in this passage from his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations: When the price of any commodity is ... sufficient to pay the rent of land, the wages of labour....
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