5. Questions and Problems 8 You read in a business magazine that computer firms are reaping high profits. With the theory of perfect competition in mind, what do you expe happen over time? Complete the following sentences to describe the long-run adjustment. The number of computer firms in the market will increase The number of computers in the market will decrease Computer prices will The profits of computer firms will

5. Questions and Problems 8 You read in a business magazine that computer firms are reaping high profits. With the theory of perfect competition in mind, what do you expe happen over time? Complete the following sentences to describe the long-run adjustment. The number of computer firms in the market will increase The number of computers in the market will decrease Computer prices will The profits of computer firms will

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 13P

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Concept explainers

Laffer Curve Analysis

In terms of economics, the Laffer curve was popular among those economists who were or who belonged to the supply side of the economic peripheral. This concept was popularized by the famous supply-side economist known as Arthur Laffer. This curve illustrated the relationship between the tax rates and government revenue. It is already known that the tax which the public or individuals residing in an economy bear is the revenue or income of the government with the help of which the government does all the necessary works in the society, which is beneficial for the economy.

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5. Questions and Problems 8
You read in a business magazine that computer firms are reaping high profits. With the theory of perfect competition
happen over time?
Complete the following sentences to describe the long-run adjustment.
The number of computer firms in the market will
fall
The number of comp
the market will
rise
Computer prices will
The profits of computer firms will

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A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
What two lines on a cost curve diagram intersect at the shutdown point?
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