Maintain quality and accuracy in your answer. Avoid plagiarism. 31. Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. Thefirm will earn zero economic profit,a. at a price between P1 and P2b.at a price of P1at a price of P3at a price above P1at a price of P2Dollars per unitP₁P₂P₂c.d.e.0a bcdMCATCAVC-D₁= MR₁-D=MR₂-D=MR₂Quantity 32. In the previous problem, suppose the market price is P1, the profit-maximizing quantity for the firm isa.e units of outputd units of outputb units of outputa units of outputbetween d and e units of output33. In the previous problem, the firm will shut down in the short run.At a price of P2At a price below P3C.At a price of P1d.At a price above P1e. At a price between P2 and P334. If a perfectly competitive firm is incurring losses in the short run, it:a. will shut down.b.will incur a loss in the long run as well.C.will raise its price in the short run.d. will continue to operate in the short run if its variable cost is covered.will continue to operate in the short run if its fixed cost is covered.ilun firmcanning market conditib.c.d.e.a.b.e.

The perfectly competitive market refers to the market where large number of buyer and sellers are…

31. Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. The firm will earn zero economic profit, c. at a price of P3 d. e. Dollars per unit P₂ a. at a price between P1 and P2 b. at a price of P1 P₂ at a price above P1 at a price of P2 MC ATC AVC -D₁= MR₁ ·D=MR₂ -DMR₂

31. Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. The firm will earn zero economic profit, c. at a price of P3 d. e. Dollars per unit P₂ a. at a price between P1 and P2 b. at a price of P1 P₂ at a price above P1 at a price of P2 MC ATC AVC -D₁= MR₁ ·D=MR₂ -DMR₂

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

Maintain quality and accuracy in your answer. Avoid plagiarism.

31. Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. The
firm will earn zero economic profit,
a. at a price between P1 and P2
b.
at a price of P1
at a price of P3
at a price above P1
at a price of P2
Dollars per unit
P₁
P₂
P₂
c.
d.
e.
0
a b
cd
MC
ATC
AVC
-D₁= MR₁
-D=MR₂
-D=MR₂
Quantity

32. In the previous problem, suppose the market price is P1, the profit-maximizing quantity for the firm is
a.
e units of output
d units of output
b units of output
a units of output
between d and e units of output
33. In the previous problem, the firm will shut down in the short run.
At a price of P2
At a price below P3
C.
At a price of P1
d.
At a price above P1
e. At a price between P2 and P3
34. If a perfectly competitive firm is incurring losses in the short run, it:
a. will shut down.
b.
will incur a loss in the long run as well.
C.
will raise its price in the short run.
d. will continue to operate in the short run if its variable cost is covered.
will continue to operate in the short run if its fixed cost is covered.
ilun firmc
anning market conditi
b.
c.
d.
e.
a.
b.
e.

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