13. Firms in Competitive MarketsThe market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses.Which of the following statements is true about the price of fertilizer? Check all that apply.The price of fertilizer must be less than average total cost.The price of fertilizer must be less than marginal cost.The price of fertilizer must be equal to average variable cost.The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves.Prics and CastMCFirmDemandQuantityMarketQuantity(?)If firms in the market are producing output but are currently making economic losses,market, and indicates the corresponding supply curve.illustrates the present situation for the typical firm in theAssuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the longrun? Check all that apply.The quantity supplied by each firm will increase.Average total cost will increase.Marginal cost will increase.The price of fertilizer will decrease.The total quantity supplied to the market will increase.

The true statement is - The price of fertilizer must be less than average total cost. If firms in…

Answered: 13. Firms in Competitive Markets The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a.Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases. b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
Lisa lawn company (LLC) is a lawn mowing business in a perfectly competitive market for lawn moving services. The following tables set out Lisa's costs Quantity(lawn per hour) Total Cost(dollars per lawn) 0 $30 1 $40 2 $55 3 $75 4 $100 5 $130 6 $165 A. If the market price is $30 per lawn, How many lawns per hour does Lisa's LLC now? B. If the market price is 30 per lawn, What is Lisa"s profit in the short run? C. if the market price falls to $20 per lawn, how many lawns per hour does Lisa's LLC now? D. if the market price falls to $20 per lawn, what is Lisa's profit in the short run? E. At What market price will Lisa shut down?
3. Profit maximization in the cost-curve diagram Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 100 90 Profit or Loss 80 70 ATC 60 50 40 30 AVC 20 MC 10 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pans per day) In the short run, at a market price of $50 per pan, this firm will choose to produce 37,500 pans per day. PRICE (Dollars perpan)
The accompanying graph depicts the cost curves of an individual firm in a perfectly (or purely) competitive industry.
Consider a perfectly competitive market for a product Y and assume that the market is at the long run equilibrium. (a) Examine the cost structure and demand faced by an individual Y producer. Relate that producer to the Y market at the perfectly competitive long run equilibrium. Support with market and individual producer diagrams. (b) Analyze the effects of the following news on price and quantity in the Y market as well as the profit and output of the individual Y producer “It is discovered that consuming Y is beneficial to health and can prolong your life”. Explain both the short run and the long run equilibria and support your answers with suitable diagrams. Hi, I have the answer sheet but may I request for a more detailed explanation for part b? Thank you.
Brody's firm produces trumpets in a perfectly competitive market. The table below shows Brody's total variable cost. He has a fixed cost of $240, and the price per trumpet is $60.-Calculate the average total cost of producing 6 trumpets. Show your work. -Calculate the marginal cost of producing the 11th trumpet. -What is Brody's profit-maximizing quantity? Use marginal analysis to explain your answer. -At the profit-maximizing quantity you determined in part (c), calculate Brody's profit or loss. Show your work. -Brody also produces saxophones at a loss in a perfectly competitive market. Draw a correctly labeled graph for Brody's firm showing the following at a market price of $200. -Brody's profit-maximizing quantity of saxophones -Brody's loss, completely shaded Quantity Total Variable cost 6 $120 7 $145 8 $165 9 $220 10 $290 11 $390
Astro Computers makes onboard vehicle control computers for the Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them. 1. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market. (the graph is in the picture) 2. Is Astro earning “excess profit” (explain what that means if you think they are) and how other firms will react when they see Astro’s performance? 3. The production department has also done a bit of research on other firms operating in the market for onboard control computers. The graph below shows the relative sizes and cost structures of the four largest firms in the market (Data, Astro, Consolidated and BCS); these four firms combined account for 35% of business in the market for onboard control computers. There are over fifteen firms that supply onboard control computers…
In Problem 5, the market demand decreases and the demand schedule becomes: If firms have the same costs set out in Problem 5, what is the market price and the firm’s economic profit or loss in the short run? Problem 5 The market for paper is perfectly competitive and 1,000 firms produce paper. The table sets out the market demand schedule for paper. The table in the next column sets out the costs of each producer of paper. Calculate the market price, the market output, the quantity produced by each firm, and the firm’s economic profit or loss.
COURSE: ECONOMICS A competitive firm has a marginal cost function CM = 6 + 4q and market price is P = $12.a) What the firm's level of output?b) What producer surplus? Hint: graph and computec) Assume that Average Variable Cost is AVC = 6 + 2q and Fixed Costs FC = $6; does firm have a positive, negative or zero profit? Explain
9. Problems and Applications Q9 The market for apple pies in the city of Ectenia is competitive and has the following demand schedule: Each producer in the market has a fixed cost of $6 and the following marginal cost: Quantity Marginal Cost (Dollars) 1 1 2 3 4 5 6 Complete the following table by computing the total cost and average total cost for each quantity produced. Quantity Total Cost Average Total Cost (Ples) (Dollars) (Dollars) 1 2 3 4 3 8 10 12 14 The price of a pie is now $11. At a price of $11, making a profit of O True O Fal pies are sold in the market. Each producer makes True or False: The market is in long-run equilibrium. Suppose that in the long run there is free entry and exit. In the long run, each producer earns a profit of each producer makes pies, so there are The market price is producers operating. pies, so there are At this price, producers in this market, each pies are sold in this market, and
Use this table to answer the following question. Output Total Variable Cost $1 $20 $2 $24 $3 $33 $4 $40 $5 $45 $6 $60 $7 $77 $8 $96 $9 $180 $10 $200 The government just mandated that all firms must install new technology to reduce pollution. The new technology costs $13. The market price is $8. In the long run, will the firm stay open or shut down?
I DO NOT NEED THE CHART I ONLY NEED THE QUESTIONS Quantity of Output Total Cost Marginal Cost Average Total Cost 0 $100 1 $120 2 $135 3 $145 4 $160 5 $180 6 $205 7 $240 8 $285 9 $350 10 $440 Approximately where do you think the price will end up in this market over the long run? Explain your answer. Last, instead of assuming a given price, how would you go about finding the equilibrium price if you were given information on market demand? Assume that this market is made up of 10 identical sellers with costs as above, and that market demand can be given as below. It may be useful to construct a column for market supply knowing the cost information per seller and that there are ten identical sellers in the market.

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