4. In the graph below, does the "rectangular area" represent which economic region of the company operating in a perfectly competitive market in the short term? MC.marginal cost; ATC: average total cost; AR= Average revenue; MR-Marginal revenue; P-price Price 17 A)Abnormal profit B) Loss C) Normal profit D) Excessive profit E) Break-even point

4. In the graph below, does the "rectangular area" represent which economic region of the company operating in a perfectly competitive market in the short term? MC.marginal cost; ATC: average total cost; AR= Average revenue; MR-Marginal revenue; P-price Price 17 A)Abnormal profit B) Loss C) Normal profit D) Excessive profit E) Break-even point

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 5CQQ

See similar textbooks

Similar questions

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5 + 14g, and average variable costs of AVC = 5 + 7q. (a) What are the firm's variable costs (VC)? (b) What is the firm's total cost function? (c) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers (downward slopping). Please provide a logical discussion about how the market achieves short-run equilibrium.
1. The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive industry. Price ($) 14 12 10 MR =8 6 4 2 10 20 30 MC ATC Quantity (units) a. What price does the firm face in the market? b. At what level of output does the firm maximize profits? c. What is the revenue of the firm when it sells the profit-maximizing level of output? d. What is the total cost of the firm when it produces the profit-maximizing level of output? e. What is the maximum profit that the firm can make? f. Discuss the implications if the level of production is 10. g. Discuss the implications if the price is 2.
Revenue and cost (dollars per unit) MC AVC 50 40 30 20 10 10 20 30 40 50 Output (units per day) The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should Select one: a. produce 30 units. b. produce more than 30 units and less than 40 units. c. produce 40 units. d. shut down. e. produce more than 10 and less than 30 units.
Graph represents the cost structure of an individual firm in a perfectly competitive market. If the price decreases to $25, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output.
1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costsof MC = 5 + 14q, and average variable costs of AVC = 5 + 7q.(a) What are the firm's variable costs (VC)?(b) What is the firm's total cost function? (0) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers(downward slopping). Please provide a logical discussion about how the marketachieves short-run equilibrium.
Question 3
Slide 2 Questions: a. What is the total revenue of the firm at the optimum level of output? b. What is the total cost at the optimum level of output? c. What is the profit of the firm at the optimum (profit-maximizing) level of output? d. What is the average cost of each unit sold at the optimum level of output? Is the firm at its log-run equilibrium? If yes/no, why?
ATC MC 50 40 AVC 30 20 8 10 11 12 Quantity (per day) a. If the price in this market is $50, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output. Show your calculations b. If the price decreases to $25. c) Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Explain your answer. d) Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium? Explain your answer. Price and costs (dollars)
(a) Calculate this firm’s marginal cost for output level 5. (b) Calculate this firm’s marginal cost for output level 6. (c) What is the average total cost at which, this firm reaches its break even-point? (d) What is the average variable cost at which, this firm reaches its shut-down point?
52) Pappy's Popcorn Emporium operates in a perfectly competitive industry and hires you as an economic consultant. Pappy's is currently producing at a point where market price equals its marginal cost. Its market price is less than its average variable cost. You advise Pappy's to A) cease production immediately because it is not covering its operating costs. B) lower its price so that it can sell more units of output. C) produce in the short run to minimize its loss, but exit the industry in the long run. D) raise its price until it breaks even. 53) A firm will ________ in the short run if variable costs exceed revenues. A) earn a profit B) produce at a loss C) break even D) shut down 54) A perfectly competitive firm's ________ point is the lowest point on its AVC curve. A) profit maximizing B) break-even C) shut down D) loss maximizing 55) A firm ________ in the short-run has an incentive to expand its long-run scale…
14. Profit maximization and shutting down in the short run The following graph plots daily cost curves for a firm operating in the competitive market for fitness trackers. PRICE (Dollars per tracker) 8888888 20 10 ATC MC AVC 10 20 30 40 50 GO 70 00 90 100 QUANTITY (Thousands of tracker) Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per tracker) Quantity (Trackers) Total Revenue (Dollars) Fixed Cost (Dollars) Variable Cost (Dollars) Profit (Dollars) 25.00 520,000 40.00 65.00 520,000 520,000 If the firm shuts down, it must incur its fixed costs (FC) in…
1.) Price: 2.) Quantity: 3.) Total Revenue: 4.) Total Cost: 5.) Total Variable Cost: 6.) Total Fixed Cost: 7.) Profit: 8.) Produce or Shut down: 9.) Draw, shade, and label profit rectangle 10.) Price: 11.) Quantity: 12.) Total Revenue: 13.) Total Cost: 14.) Total Variable Cost: 15.) Total Fixed Cost: 16.) Profit: 17.) Produce or Shut down: 18.) Draw, shade, and label profit rectangle