4. Bob's ice-cream house, a perfectly competitive firm, is suffering a loss, but the price is still above minimum average variable cost. Then in the short run this firm should and in the long run, if there is no change in economic conditions, this firm should a) shut down; exit the industry b) shut down; expand e) produce where MR = MC; exit the industry 4) produce where MR = MC; expand

4. Bob's ice-cream house, a perfectly competitive firm, is suffering a loss, but the price is still above minimum average variable cost. Then in the short run this firm should and in the long run, if there is no change in economic conditions, this firm should a) shut down; exit the industry b) shut down; expand e) produce where MR = MC; exit the industry 4) produce where MR = MC; expand

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider an individual firm operating in a perfectly competitive market. Suppose there is an increase in industry supply caused by new firms entering the market. As a result, an individual firm that is currently earning positive profits will see its profits a. impossible to determine. b.increase. c.decrease. d.not change. Consider a perfectly competitive market. Suppose you observe that there aren't any new firms entering the industry, and the current firms are not exiting the industry. You conclude that firms in the market are a.suffering an economic loss. b.earning an accounting profit. c.breaking even. d.earning an economic profit.
A perfectly competitive industry consists of many identical firms, each with a long-run total cost function of TC = 500Q-20Q^2+0.5Q^3. a. In long-run equilibrium, how much will each firm produce? b. What is the long-run equilibrium price? c. The industry's demand curve is ?? = 48,000 − 60?. How many firms are in the I ndustry? d. If the industry demand decreases to ?? = 30,000 − 80? how will the industry respond?
Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should A) decrease its production. B) shut down. C) increase its production. D) increase the price it charges for its product. E) do nothing because it is already maximizing its profit.
1) The cost curves for a firm in a perfectly competitive industry are given below. Complete the table. If the firm operates in a perfectly competitive market, and the market price is $25 per unit, what Quantity should this firm produce at? TFC TC TVC AVC ATC MC TR S100 S100 1 S100 S130 2 S100 S150 S100 S160 S100 S172 5 S100 S185 6 S100 $210 S100 $240 S100 $280 S100 $330 10 S100 $390 Table 9.1
If the price for a fırm's output is greater than the minimum value of its average variable cost, but less than the minimum value of its average total cost, then the firm should shut down in the short run, but resume producing in the long run. the firm should continue producing in the short run, but exit the market in the long run. the firm is earning positive economic profit. the firm should shut down in the short run and exit the market in the long run. the firm should continue producing in both the short run and the long run.
QUESTION 10 In the short run, in order to maximize profit, a firm in a perfectly competitive market will operate where P = MC, given that P is greater than ATC. P = MC, given that P is greater than AVC. P = TR = TC. P > MR > MC.
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Crabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each month from May through September, suffers losses in October, November, and April but remains open, and remains closed from December through March. Given that the restaurant market in this town is perfectly competitive, how would you explain Crabby Bob’s decisions?
Determine a perfectly competitive firm’s profit-maximizing output level and profit in the short run.