QUESTION 6 2$ MC ATC AVC D = MR Consider the purely competitive firm whose data are shown in the accompanying graph. At its short-run equilibrium point, the firm is earning O zero normal profits. O zero accounting profits. zero economic profits. O We can say nothing about this firm's profit or loss situation.
Q: Select one: O a. It is making economic losses, which means it is in a long run equilibrium. O b. It…
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A: The correct option is B i.e. should produce that level at which MR=MC.
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A: In the long run, a competitive firm earns only the normal profit or zero economic profit.
Q: is given by: TC TR 9,800 5,600 2,100 300 800 1,400 Output (Q) Select one: O A. $7 OB. $10 OC. $8 OD.…
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Q: Figure 6.1 MC ATC AVC MR2 MR, 30 40 50 60 Quantity Refer to Figure 6.1. Given MR2, what is total…
A: Here, it is given that firm is producing 60 units with the minimum average total cost of $4.
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- Price and Cost ($) Given the information from the figure, if price equals $0.40, the firm should ATC 1.2 AVC 0.8 0.6 0.4 0.2 0.2 0.4 9'0 0.8 Output 1.2 O stay open because it is making an economic profit O stay open in the short run only because it is operating at an economic loss O stay open because it is making a normal profit O shut down in the short run because it will minimize its lossSuppose a firm operating in a competitive market has the following cost curves: a. $9 b. $50 PRICE c. $30 O d. $15 20 18 16 14 10 878 6 st 4 2 12 MC Refer to Figure 14-2. If the market price is $10, what is the firm's short-run economic profit? ATC 3 4 5 6 7 8 9 10 QUANTITYQuestion 18 Suppose a perfectly competitive firm faces the following situation: P = $10, output= 3,000, ATC= $8.50, MC $11, and AVC=$7.50. Which statement accurately describes the firm's situation? = O The firm incurs a loss and is minimizing its losses. O The firm carns a profit but should increase output to maximize its profits. O The firm is maximizing its profits. The firm earns a profit but should decrease output to maximize its profits.
- Question 7 If a perfectly competitive firm incurs an economic loss, it should: O Shut down if this loss exceeds fixed cost. O Try to raise its price. O Shut down in long run. O Shut down immediately.QUESTION 24 The total revenue of a purely competitive firm from selling 6 units of output is $48. Based on this information, the unit price of the output must be O $54. O $8. O $42. O $288.Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market? The short-run average total costs of firms that are price takers will be constant. O If a price taker increased its price, consumers would buy from other suppliers. O Firms in a price-taker market will have to advertise in order to increase sales. There are no good substitutes for the product supplied by a firm that is a price taker.
- A perfectly competitive firm that makes car batteries has total fixed costs of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm's minimum AVC Is $105 per battery. The firm is currently producing 500 batteries a month (the output level at which MR=MC). This firm is making a O loss, shut down O profit, shut down O profit: increase O loss; increase and should. productionSuppose that marginal revenue for a perfectly competitive firm is $20. When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm A) should stay open and incur an economic loss of $20. B) must decrease its output to increase its profit. C) must increase its output to increase its profit. O D) should not change its production because it is already maximizing its profit and is making an economic profit. E) should shut down.If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.
- Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, marginal cost exceeds this firm's price. Assuming price exceeds average variable cost, to maximize profits Cathy's should O a. stop producing since it is earning a loss. O b. decrease their output. Oc make no adjustments as they are already maximizing their profits. Od. increase their output. Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5.000 bags of potato chips at the same total cost. Complete the following statement with the correct answer. If each produces more, the costs of Kyle's factory will exceed those of Stan's factory. Ob. more, their costs will be equal. less, the costs of Kyle's factory will exceed those of Stan's factory. Od. less, their costs will be equal. If a firm is producing where…Which of the following best describes the short-run supply curve for an individual perfectly competitive firm? Select one: a. It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. Ob. It is the upward-sloping part of the firm's marginal cost curve. O c. It is the firm's marginal cost curve. Od. It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 70 60 ATC 40 30 20 AVC 10 + ++++ 10 15 20 3 30 35 o 5 QUANTITY (Thousands of jackets) 50 For each price in the following table, use the graph to determine the number ofr jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 10 20 32 COSTS (Dollars)