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26 - What is the maximum profit condition in a perfectly competitive market? a) TC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

26 -

What is the maximum profit condition in a perfectly competitive market?

TC<MR

MC=MR

P<AC

AC=AR

TO)

TC=TR

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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QUESTION 28 A perfectly competitive firm is producing at an output level of 1200 where marginal revenue is $15, marginal cost is $15, average variable cost is $14, average total cost is $21.50. The fim is O making a profit of $1,200 O making a loss of -$24,600 O making a loss of-$7,800 O making a profit of $7,800
1. Competitive market, Practice Question Wheat farmer Joe has the cost function of C(q) = 160,000 + 100q+q²__ The market for wheat is competitive and there are many farmers like this, with the same cost function. The demand function is Q = 15000 - 10p. (a) In the short run, below which price should Joe shut down? (b) In the short run, there are 19 farmers like Joe (so 20 farmers in total). How much should Joe produce? What will the price be? (c) What is the price below which Joe would shut down in the long run? (d) How many farmers will operate in the long run? (e) What is the market elasticity of demand at long-run equilibrium point?