Equilibrium price is $25 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 2,000 units of output. At 2,000 units, ATC is $33, and AVC is $27. The best policy for this firm is to _ in the short run. Also, total fixed cost equals and total variable O cost equals for this firm. a. There is not enough information to answer all parts of the question. b. continue to produce; $12,000; $54,000 c. shut down; $12,000; $54,000 O O d. continue to produce; $150; $1,500 e. shut down; $66,000; $54,000

Equilibrium price is $25 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 2,000 units of output. At 2,000 units, ATC is $33, and AVC is $27. The best policy for this firm is to _ in the short run. Also, total fixed cost equals and total variable O cost equals for this firm. a. There is not enough information to answer all parts of the question. b. continue to produce; $12,000; $54,000 c. shut down; $12,000; $54,000 O O d. continue to produce; $150; $1,500 e. shut down; $66,000; $54,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Would a firm earning zero economic profit continue to produce, even in the long run? In long-run competitive equilibrium, a firm earning zero economic profit A. will not continue to produce because this return is not covering its opportunity costs. B. will not continue to produce because it would be better off shutting down. C. will not continue to produce because such profit corresponds with negative accounting profit. D. will continue to produce because such profit is as high a return as could be earned elsewhere. E. will not continue to produce because it could earn a better return in another industry.
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If a perfectly competitive firm decides to operate at a loss in the short run, it will minimize that loss by producing the quantity at which * the ATC is minimized. the AVC is minimized. the MC equals the price. the ATC equals the price. O the AVC equals the price.
QUESTION 2: Consider the cost curves for a perfectly competitive firm. MC $9.00 $8.00 $7.00 $6.00 ATC $5.00 $4.00 AVC $3.00 $2.00 $1.00 $0.00 100 200 300 400 380 480 500 600 Quantity A) Refer to the graph above. If market price of product is $7, the fim produces maximize profits. units to a. 380 b. 500 с. 600 d. 480 B) Refer to your answer above. At the profit maximizing output level, the firm makes a total profit (loss) of $ in the long-run: and the firm can expect a. $500; entry b. $480; entry c.$ 800; entry d. $0; no entry no exit Price, Cost
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