Consider the table on the right, which shows the variousrevenue concepts for a perfectly competitive firm.Suppose the firm faces a constant market price of $4.Compute first total revenue for each level of output and fillin the TR column of the table. Next, compute marginalrevenue for each level of output and fill in the MR columnof the table.(Marginal revenue at each level of output is computedusing total revenue for two successive levels of output.For example, marginal revenue at 160 uses total revenuefor output levels 120 and 160.)TotalMarginalPrice (p)Quantity (Q) Revenue (TR)Revenue (MR)$4AEA120$4160$4200$4240$4280$EA EA EA10Sค

Approach to solving the question: Calculate Total Revenue (TR) and Marginal Revenue (MR) for each…

Answered: Consider the table on the right, which…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section: Chapter Questions

Problem 13QP

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Similar questions

Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?
A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new process lowers the firm’saverage cost, meaning that this firm alone (although still aprice taker) can earn real economic profits in the long run. a. If the market price is $20 per widget and the firm’s marginalcost is given by MC=0.4q , where q is the dailywidget production for the firm, how many widgets willthe firm produce? b. Suppose a government study has found that the firm’snew process is polluting the air and estimates the socialmarginal cost of widget production by this firm to be. If the market price is still $20, what is thesocially optimal level of production for the firm? Whatshould be the rate of a government-imposed excise tax tobring about this optimal level of production? c. Graph your results.
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.

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