Firms in an industry have the following cost function: C(q)=3q3-6q2+4q. If the market is perfectly competitive, what do we expect the price to be in the long run? Select one: a. 2 b. 3 c. 1 d. 8
Q: The cost structure of the typical ice cream producer is as follows. Average total cost i 50 1 ATC(Q)…
A: The cost function describes the link between production and costs. The cost function is obtained by…
Q: Assume that a firm in a competitive market faces the following cost information. If the market price…
A: PLEASE FIND THE ANSWER BELOW.
Q: The information below applies to a competitive firm that sells its output for $45 per unit. When the…
A: Marginal revenue is the additional revenue gained from selling an additional unit of the output. In…
Q: competitive market price is $60, and a competitive firm’s total costs = q^2 - 6q + 990 and marginal…
A: * SOLUTION :-
Q: Farmer Smith grows wheat. The average total cost and marginal cost of growing wheat for an…
A: Competitive market refers to the market structure where there are many buyer and many sellers, thus…
Q: 100 90 80 70 60 ATC 50 40 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of…
A: please find the answer below.
Q: A competitive firm is maximizing its profit by selling 150 units of output. The firm’s marginal cost…
A: The objective of the question is to calculate the profit of a competitive firm that is maximizing…
Q: Suppose that a consumer spends a fixed amount of income per month on the following pairs of goods:…
A: Substitute goods are goods that can be substituted or used in place of other goods if the price of…
Q: productioni are lmustrated in the Tigure to the right. 12.00- MC 11.00 me the market for pumpkins is…
A: In a competitive form there are large number of firms selling identical products thus having no…
Q: e shapes of firms' cost curves are important because they help us determine how the firm will…
A: The cost curve is the curve that is a graphical representation of the firm's cost at different…
Q: COSTS (Dollars) 100 90 80 70 30 20 10 0 U MC 15, 20 ATC AVC ☐ 0 03 6 9 12 15 18 21 24 QUANTITY…
A: In a perfectly competitive market there are large number of firms producing similar and identical…
Q: c) A certain brand of vacuum cleaners can be purchased from several local stores as well as from…
A: Economic profit is the gap between the total revenue of the firm and its total economic costs that…
Q: A firm sells 1,000 units per week. Suppose the average variable cost is $40, and the average cost is…
A: A firm will produce in short run if the P > AVC And a firm will produce in long run if P >…
Q: A firm's cost curves are given in the following table. 9 0 1 2 3 4 5 6 7 8 9 10 i) ii) iii) iv) TC…
A: TC(total cost) is the sum of fixed(TFC) and variable (TVC) costs. ATC(average total cost) is the…
Q: The wheat industry is comprised of many firms producing an identical product. Market demand and…
A: Firms in perfect competition are price takers. Price is set by market forces of demand and supply.…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: In a competitive market, there are large number of firms selling identical products. Firm's ATC is…
Q: 5. Profit maximization and shutting down in the short run Suppose that the market for microwave…
A: Profit maximization refers to a situation in which a firm is earning maximum profit by producing at…
Q: The graph below gives marginal costs (MC), average variable costs (AVC), and average total costs…
A: When P = MC = $1.5, Price (MC) is higher than AVC, so firm will continue to produce in short run. So…
Q: The Economy Tomorrow Using the folowing graph as a reference, what will be the effect of a…
A: We have given
Q: In the long run, perfectly competitive firms make zero economic profit. If this is the case, why…
A: When a company's economic profit is zero, it is in a state of normal profit, which is why normal…
Q: The demand curve and supply curve for carpet cleaning in the local market are currently as follows:…
A: A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the…
Q: Suppose the figure to the right illustrates the cost curves or a firm in a perfectly competitive…
A: Productive efficiency refers to a state in which a firm produces goods and services at the lowest…
Q: Suppose the market for peaches is perfectly competitive. The short-run average total cost and…
A: A perfectly competitive firm is a price taker. It accepts the market price as given.
Q: Suppose an avocado farm has cost: C = 0.003q° + 25q + 1000 (where q is measured in bunches). The…
A: Given: The cost of a farm is: C = 0.003q3 + 25q + 1,000 The market price per bushel of avocados is =…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: Given: To Find: The firm's optimal quantity of units and the profit/loss: If the price is below,…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: Shutdown is the situation for firm in short run where they are recovering only variable cost and…
Q: Suppose an increase in the cost of land increases the firm's fixed costs, as a result, average total…
A: The profit is maximized where MR = MC. MR is the marginal revenue and is defined as the revenue…
Q: Suppose that the long-run cost function for a perfectly competitive hrm in the personal computer How…
A: In the product market, the cost function represents the total monetary value that is spent by the…
Q: nsider the competitive market for dress shirts. The following graph shows the marginal cost (MC),…
A: A shutdown point is a degree of tasks at which an organization encounters no advantage for…
Q: “The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement…
A: Marginal cost curve represents the change in total cost with the change in output produced.
Q: The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost…
A: We can see that one of the axis we see the cost and profit is given, the verticle axis.Here, the…
Q: The market for drones is perfectly competitive. Assume for simplicity that fractions of everything,…
A: Under perfect competition, an individual firm is a price taker in the market. All firms sell a…
Q: Would a cost function of 0 mean a linear line of supply curve? For example if 10 firms are on the…
A: A cost function is a mathematical function that is used to show the general relationship between the…
Q: Suppose the market price of sugar is 22 cents per pound. If a sugar farmer produces 100,000 pounds,…
A: When there are numerous buyers and sellers, the impact of each on the market price is minimal, the…
Q: What portion of the marginal cost (MC) is the supply curve for a perfect competitive firm (the…
A: Marginal cost curve represents the addition to total cost, when one more unit of commodity is…
Q: A market in perfect competition is in long-run equilibrium. What happens to the market if labor…
A:
Q: The curves show the marginal cost (MC), average variable cost (AVC), marginal revenue (MR), and…
A: The total cost incurred by a firm is the sum of fixed costs and variable costs. Fixed costs do not…
Q: Suppose the market for beans is perfectly competitive. The average total cost and marginal cost of…
A: The perfectly competitive market refers to market large number of buyers and sellers exists in the…
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: Assume that a firm in a competitive market faces the following cost information. If the market price…
A: Firms in perfect competition are price takers as there are a large number of firms selling identical…
Q: you've been learning about what makes a market perfectly competitive, how a firm in a perfectly…
A: Perfectly competitive market: In this type of market there are a huge number of buyers and sellers…
Q: Suppose the market for peaches is perfectly competitive. The short-run average total cost and…
A: A perefectly competitive firm is a price taker, which means it takes the price set by market forces…
Q: Consider the competitive market for sports jackets. The following graph shows the marginal cost…
A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…
Q: The accompanying graph depicts the cost curves of an individual firm in a perfectly (or purely a.…
A: A large number of sellers and buyers with homogeneous products are selling in the markets described…
Q: In the short run, at a market price of $50 per oven, this firm will choose to produce ovens per day.…
A: The structure of a market where there are many buyers and sellers selling homogenous products in the…
Step by step
Solved in 2 steps
- The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per oven) 100 90 80 70 40 30 20 10 0 0 5 0 MC ATC AVC 10 15 20 25 30 35 QUANTITY (Thousands of ovens) 40 45 50 (?)Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.
- Suppose that the market for dress shirts is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. (?) 50 45 Profit or Loss 40 35 30 АТС 25 20 15 10 AVC MC 4 8 12 16 20 24 28 32 36 40 QUANTITY OF OUTPUT (Shirts) PRICE AND COST (Dollars per shirt)What happens to a competitive firm whose cost function exhibits decreasing marginal cost everywhere? Construct a concrete cost function of this type and carry out the search for the profit-maximizing output.Homework (Ch 14) 6. Deriving the short-run supply curve Consider the competitive market for dress shirts. 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 80 70 60 АТС 50 40 30 20 AVC MC O 10 25 30 35 40 45 50 5 10 15 20 QUANTITY (Thousands of shirts) COSTS (Dollars)
- The following graph shows the demand curve, as well as the AVC, ATC and MC curves of a company selling rolled oats in a perfectly competitive market. Use the graph to answer the questions. The goal of the company is to maximize its profit. How many boxes of rolled oats should it sell to attain this goal? What price will it charge? How much profit does this firm make per month? Will this company produce or shut down in the short run? Why? Will this firm exit the market for rolled oats in the long run or not? Why?Suppose the cost of renting a snowy bus were to fall from $30 per hour to $20 per hour. What do you expect would happen in the short-run (stage 1 equilibrium) to (a) the number of cones produced by each snowy bus; (b) total production of cones in the market, and (c) economic profits of snowy bus businesses? Briefly explain (you don't need to do any calculations, just explain inwords).Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm: A) can increase profit by increasing output.B) is earning a positive economic profit.C) should continue to produce since total revenue exceeds total variable cost.D) should shut down.
- Using the table (Check if the values are correct), answer the questions below: a. What is the firms total fixed cost b. Suppose the price of the product is 20 - What is the firms output level? - What is its profit (or loss)-per-unit at that output level? $ - What is its total profit? $ c. Now suppose the price of the product is $10. - What is the firm’s profit-maximizing output level? - What is the firm's profit or loss per-unit? $ - What is the firm's total profit (or loss)? $ d. At a price of $10, will the firm produce? e. If the price remains $10, what will happen to this firm in the long-run?Problems: Question #6: The Phantom Farms bakery produces pumpkin pies according to the following short run cost schedules. Assume the pumpkin pie industry is perfectly competitive and that the bakery can only produce and sell whole pies. AVC = ATC = MC = Quantity (pies) TFC = total TVC = total TC = total fixed cost variable cost average average total marginal cost variable cost cost cost (i) same as (i) 1 14 18 14.0 18 14 2 same as (i) (ii) 28 12.0 14 10 3 same as (i) 38 42 12.7 (v) 14 4 same as (i) 60 (iii) 15.0 16 22 same as (i) 86 90 17.2 18 (vi) same as (i) 116 120 (iv) 20 30 Fill in the five missing cost numbers indicated in the table above. (i) (ii) (iii) (iv) (v) (vi) If the price of pumpkin pies is $22 per pie, how many pies should Phantom Farms produce in the short run? What profit or loss does the firm earn? Explain how you arrived at this answer. Illustrate Phantom Farms' choice with a graph and indicate profits or losses. 3Chetan's Fishing Rods is a small business that operates as a price-taker. The market price of a fishing rod is $30 and Chetan's long-run costs are given by C(q) = .1q° + 10q + 10, where is the number of fishing rods that Chetan produces. Answer the following: (a) How many rods does Chetan produce to maximize profits? (b) What are his profits? (c) At what level of output are average costs minimized? (d) Find an expression for Chetan's supply curve. (e) Sketch Chetan's supply curve, his marginal cost curve and his average cost curve.