Does L&P earn positive economic profit if it produces the allocatively efficient quantity? Explain.

Q: How does a competitive firm determine the quantity that maximizes profit?

A: The markets are considered to be of utmost importance for the economies, because it assists in the…

Q: Why do economists believe that economic profit is the more accurate measure of a business success?…

A: Accounting profit only considers the cost that has actually happened, but economic profit considers…

Q: Do entry and exit occur in the short run, the long run, both, or neither?

A: In the short run, the firms have one or more fixed factors of production. The firms cannot change…

Q: What two lines determine whether a firm is making positive or negative or zero profits?

A: Introduction The perfect competitive firm only needs to decide on one thing: how much to make. To…

Q: When would a seller possibly decide to exit the industry over the long run? What should product…

A:

Q: Why can't firms enter the market in the short-run?

A: There are various types of market structures which have different characteristics of the number of…

Q: Explain how a firm chooses a level of output to maximise profit

A: The profit maximization refers to a situation where the firm is earning the maximum possible profits…

Q: What is the equilibrium or profit-maximizing quantity of production for a perfectly competitive…

A: Prefect competitive market is:- 1) in perfect competitive market, there are many number of sellers…

Q: When does Concave profit curves occur? Explain with an example?

A: Iso quant curve refers to the curve which shows all the combination of inputs which are capable of…

Q: What is the relationship between economies of scale and the level of market competition?

A: Economies of scale help more than just the company that produces the goods. Consumers will benefit…

Q: Explain with the help of diagram why a perfectly firm may experience loss or positive economic…

A: Meaning of Perfect Competition: The term perfect competition refers to the market under which…

Q: In the long-run, a perfectly competitive firm will earn what kind of economic profit?

A: In the long run, a perfectly competitive firm will earn normal/zero economic profit.

Q: Heloise and Abelard produce letters in a perfectly competitive industry. Heloise is much better at…

A: Let's tackle each problem:a. True. In a perfectly competitive market, each firm will produce up to…

Q: g O | Output MC C b h k n a MR ATC AVC ● Use the graph and the letters in it to answer these…

A: "Every business produce in order to generate profits. While producing goods and services businesses…

Q: Using the previous table, what is the profit maximizing level of output?

A: Profit Maximization:Profit maximization happens at the point where the marginal revenue (MR) and…

Q: What does acceptable loss mean for a competitive firm? Explain and Draw a graph

A: Making business decisions and allocating resources in the face of numerous challenges is part of…

Q: MC ATC P = MR = AR

A: In a perfectly competitive market there are large number of firms producing similar and identical…

Q: WHY SOME FIRMS MIGHT BE ABLE TO CONTINUE TO MAKE AN ACONOMIC PROFIT IN THE LONG RUN?

A: A monopoly occurs when a single person or corporation serves as the exclusive supply of a certain…

Q: Use your own example to clearly differentiate between an "accounting profit" and an "economic…

A: When talking about the difference between economic and accounting profit, it can be said that…

Q: Draw a graph including AVC to illustrate a firm that is losing money, continues to operate, and…

A: The prevailing price, which is set by the relationship of supply and demand, is shown as a…

Q: Determine the output level that will maximize economic profit.

A: Economic profit is the difference between the sum of explicit and opportunity costs from the revenue…

Q: Under what conditions would a firm decide to shut down in the short run but remain invested in the…

A: In a market, a firm faces different situations in short-run and long-run due to which it makes…

Q: Using the graph from the previous question, explain why a competitive industry is efficient. Be sure…

A: The capacity of a competitive industry to attain both allocative and productive efficiency qualifies…

Q: Define the break-even point. Draw it's graph and show the areas where profit and loss occur on the…

A: The break-even point refers to the point of production in a firm at which the total revenue of an…

Q: In perfect competition market, Firms have perfect knowledge of market. What does that mean?

A: A perfect competitive market structure has many buyers and sellers. All the firms are the price…

Q: Why economic profit is negat

A: Profit: It refers to the revenue earned by the companies. With more profit earned by the companies,…

Q: When should a firm exit the market in the long run

A: Firm entry and exit refers to the process in which new companies enter a market to sell products or…

Q: Explain in detail how a perfectly competitive firm makes its profitmaximizing decision.

A: Perfectly competitive market:- The market structure in which there are no barriers on entry and exit…

Q: Why don't firms in a competitive market have excess capacity in the long run?

A: When a company produces at a lower production scale than planned, it is said to have excess…

Q: Explain whether a perfectly competitive market is more efficient for buyers to buy or sellers to…

A: When perfectly competitive markets combine with utility-maximizing buyers, the resulting quantity of…

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).