Answered: A competitive firm can increase profit…

A competitive firm can increase profit by_____________________if marginal cost exceeds price. Answers: A. Cutting output B. Raising its price C. Making no change in output D. Raising output

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 7MC

See similar textbooks

Related questions

Q: A firm that is losing money should continue to operate in the short run if the ______…

A: The total cost incurred by firms operating in a market includes fixed costs and variable costs.…

Q: What point reflects the price that a monopolist would charge? (letter) A/ What point determines the…

A: “Since you have posted multiple questions with multiple sub parts, we will provide the solution only…

Q: The industry for cobalt mining is perfectly competitive. A typical mine has a capacity constraint of…

A: The supply curve depicts the units of the commodity that producers are ready and willing to supply…

Q: 32) Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will…

A: In a market, the demand for one product can directly or indirectly impact the price of other…

Q: 1. Explain how the long run differs from the short run in pure competition. 2. The basic model of…

A: 1. In the short run, when plants and gear are fixed, the organizations in an absolutely competitive…

Q: Question 7 Which of the following statements is not true? Economies of scale means lower…

A: Economies of scale can be defined as the cost advantages which are reaped by the companies when…

Q: None

A: Ans. ) Given the graph of a perfectly competitive market. A perfectly competitive market is the…

Q: Letters are used to represent the terms used to answer this question: price(P), quantity of…

A: Answer: Correct option: option (B) Explanation: A firm earns profit if the price is higher than the…

Q: perfectly competitive industry with constant costs initially operates in long-run equilibrium. When…

A: The shape of the long-run supply curve relies on the related cost of production with the expansion…

Q: )The graph below shows the marginal revenue, marginal cost, and average total cost at different…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The short run supply curve for a firm in a perfectly competitive industry is its: A average cost…

A: Perfect competition is an ideal sort of market structure where all makers and purchasers have full…

Q: 1) Use the graph to answer the question below. The quantity is measured in thousands of units.…

A: As per the guidelines answer is given to the first question. (1) As per the diagram given in…

Q: In a market that allows free entry and exit, when does the process of entry and exit end for the…

A: New firms enter the market when existing firms are making a positive economic profit in the short…

Q: At profit-max quantity, the firm earns _________________economic profit on the last unit sold. Why?

A: The profit is the excess revenue made after deducting the total cost of production from the total…

Q: Description The firm's demand is as follows: Price $18 16 15 14 13 12 10 Quantity 2 3 4 5 6 78 Total…

A: Marginal revenue represents the additional income a company generates by selling one more unit of…

Q: At its current level of production a profit-maximizing firm in a competitive market receives $15 for…

A: A competitive market, often referred to as a perfectly competitive market, is a type of market…

Q: the short run, a firm that finds itself earning a loss should compare the market price to which cost…

A: Fixed cost is independent of output produced whereas variable cost varies with the level of…

Q: Canadian red wheat is a normal good, in a perfectly competitive market which is in long run…

A: Normal Goods are those goods that experience a rise in the demand level with a decline in their…

Q: 2. A firm sells its product in a perfectly competitive market where other charge a price of $80 per…

A: A high number of tiny businesses, homogenous products, perfect information, and ease of entry and…

Q: The competitive firm maximizes its profit by operating at the point where _____ and price is greater…

A: A competitive firm competes with other firms with the identical products and this firm size is very…

Q: When new firms enter a perfectly competitive market in which firms are making an economic profit,…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Total product TFC AFC TVC AVC TC MC $. $_ $_ 1 $ $12 2 12 10 3 60 4 56 a. Fill out the table…

A: Disclaimer: Since you have posted a question with multiple sub-parts, we will provide the solution…

Q: Explain why a firm should continue to operate in the short run so long as market price is greater…

A: The profit is maximized where MR=MC. The firm does not maximize profit if condition of MR=MC is not…

Q: Question 1 a. Draw the marginal cost and average total cost curves for a typical firm. Explain why…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: Assume a competitive firm faces a market price of $120, a cost curve of: C = 13q3 + 20q +…

A: We have, Market price = $120 cost curve of: C = 13q3 + 20q + 500, The marginal cost of: MC =…

Q: A firm sells its product in a perfectly competitive market where other firms charge a price of $100…

A: (a) A perfectly competitive firm produces at P=MC in short run. C = 60 + 12Q + 2Q2 Differentiate C…

Concept explainers

Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?

Question

A competitive firm can increase profit by_____________________if marginal cost exceeds price.


Answers:	A. Cutting output
	B. Raising its price
	C. Making no change in output
	D. Raising output

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

I. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.
The table provides data on a market demand schedule (top two rows) and a firm's average and marginal cost schedules (bottom four rows). 1. What is the firm's shutdown point? A firm will stop producing an output in the short run when the market price of the good is _________. A. below minimum AVC B. equals ATC C. below minimum ATC D. equals MC This firm's shutdown point is at a market price of $ ? per unit and its profit-maximizing output is ? units.
a. What is its profit?b. What is its marginal cost?c. What is its average variable cost?d. Is the efficient scale of the firm more than, less than, or exactly 100 units? use this to solve A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200.
The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 per cent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________. Select one: A. increases; zero; price of apples will return to its original level B. increases; zero; orchards will be replanted and economic profit will return to zero C. increases; positive; orchards will be replanted and economic profit will return to zero D. remains the same; zero; orchards will be replanted and growers will make normal profits
A perfectly competitive firm would produce______________________________________if it wanted to maximize its profit: Answers: A. the output where MC equals price, the marginal revenue B. the output where the ATC curve is at a minimum C. as much output as it is able to produce D. the output where the marginal cost curve is at a minimum
microeconomics
A profit-maximizing firm in a competitive market is currently producing 500 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?
Refer to the above figure. The firm is currently producing at Q2. The firm shouldSelect one:A.shut down.B.increase production.C.leave production as it is.D.reduce production.
f the firm is producing at a quantity where marginal revenue exceeds marginal cost then, in order to increase profit, ___ Question 17 options: the firm's perceived demand will shift to the left. the firm should keep expanding production. any additional unit produced would decrease profit. the firm is now earning zero profit.
P E A MR S ATC Av C What point reflects the price that a monopolist would charge? (letter) Answer 1 Q AV What point determines the output that would be produced under perfect competition? (letter)
Wheat is produced in a perfectly competitive market. Suppose the market demand for wheat increases. This will cause the individual wheat farmer's marginal revenue to ________ and their profit-maximizing level of output to ________. a.decrease; increase b.decrease; decrease c.increase; increase d.increase; decrease
Question 3 A profit maximizing firm in a competitive market is currently producing 150 units of output at a price of $20. Average total cost is $8 and fixed cost is $200. What is this firm’s profit? $1,800 $2,000 $800 $1,600