Assume that a small firm was at one point in the SR experiencing positive economic profits, because it had been able to create a niche for its particular good. Currently, this firm is selling its good at P = $39.99. It’s AFC = $14.04, and its AVC = $25.95. Given this information, answer the following questions: What is the name of this market structure? Illustrate this firm’s current situation in its market. Specifically identify/label the areas that represent total revenue, total cost, and profit/loss/break-even. Given the information provided, fully yet briefly explain what likely happened to this firm. Fully yet briefly explain how this firm might regain its economic profits E. List the two concepts related to this market structure that are sometimes considered to be controversial. Fully yet briefly explain both sides of that argument.

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Answered: Assume that a small firm was at one…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that a small firm was at one point in the SR experiencing positive economic profits, because it had been able to create a niche for its particular good.

Currently, this firm is selling its good at P = $39.99. It’s AFC = $14.04, and its AVC = $25.95.

Given this information, answer the following questions:

What is the name of this market structure?
Illustrate this firm’s current situation in its market. Specifically identify/label the areas that represent total revenue, total cost, and profit/loss/break-even.
Given the information provided, fully yet briefly explain what likely happened to this firm.
Fully yet briefly explain how this firm might regain its economic profits

E. List the two concepts related to this market structure that are sometimes considered to be controversial. Fully yet briefly explain both sides of that argument.

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