8. Ina sells her homegrown eggplant at a roadside stand. Assume that the industry is perfectly competitive. Draw average total cost, average variable cost and marginal cost curves. Draw the marginal revenue curve (MR) such that the price is equal to the shut-down price. Label this MR Then indicate the profit-maximizing output (Q). Label this Q

8. Ina sells her homegrown eggplant at a roadside stand. Assume that the industry is perfectly competitive. Draw average total cost, average variable cost and marginal cost curves. Draw the marginal revenue curve (MR) such that the price is equal to the shut-down price. Label this MR Then indicate the profit-maximizing output (Q). Label this Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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M10
Required information The following figure shows the costs for a perfectly competitive producer: AVC, ATC, MC $46 235 30 25 20 15 10 5 0 MC 10 20 30 40 50 60 70 80 90 100 ATC AVC Output per period Refer to the above figure to answer this question. If the price of the product is $10, what is the profit-maximizing (or loss-minimizing) output?
a.Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases. b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
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?
The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output. Price R W S L 0 A F B G C M At the profit-maximizing level of output: MC ATC AVC MR Quantity a. the firm is earning economic profit. b. profits per unit are the highest relative to all other output choices. c. profit equals ZC. d. costs exceed revenue.
Refer to the figure above. When the demand curve is given by P2 = $15, this firm should ______ A. continue to operate in the short run and think about shutting down in the long run B. discontinue operation in the short run since there is a loss when operating. C. keep operating as long as loss is not greater than total cost D. discontinue operation in the short run since average total cost is greater than price. When the demand is P3 = $10, this firm should ______ A. continue to operate in the short run and think about shutting down in the long run B. discontinue operation in the short run since the firm is unable to cover variable costs. C. keep operating as long as loss is not greater than total cost D. discontinue operation in the short run since average total cost is greater than price.
A firm is selling apples is profit-maximizing, but they're in a constant cost industry. The industry is perfectly competitive and currently in long-run equilibrium. Assume apples are a normal good and consumer income falls, and the firm continues to produce. 1. Illustrate the decrease in income in the short run with a cost curves graph. Make sure to highlight the area of loss.
Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves for a typical firm in the industry.
Use a graph to demonstrate the scenario where a competitive firm would be earning positive profit in the short run. Can this scenario be maintained in the long run? Why? What are the ‘shutdown point’ and ‘break even point’ of a competitive firm . Explain with diagram. A competitive market starts in a situation of long run equilibrium. Then there is an increase in demand. Explain what happens in the short run and long run, using necessary diagrams.
Which of the following statements applies to a purely competitive producer? a. it will not advertise its product b. in long-run equilibrium, it will earn an economic profit c. its product will have a brand name that elicits customer loyalty d. its product is slightly different from those of its competitors [ don't give chatgpt answer]
Figure 1 shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and Table 1 shows the market demand schedule for toys. At what market prices would the firm shut down temporarily? What is the market price of a toy in long-run equilibrium? How many firms will be in the toy market in the long run? Explain your answer.