Firms in competitive market in the long run : Firms have positive economic profit Firm operate at efficient scale market supply curve is a horizontal line Which statement is true and false. Explain
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Firms in competitive market in the long run :
Firms have positive economic profit
Firm operate at
market supply curve is a horizontal line
Which statement is true and false. Explain
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Solved in 2 steps
- In the long run when a perfectly competitive firm experiences positive economic profits firms exit the industry, the market supply curve shilts leftward, and the market price rises. firms enter the Industry, the market supply curve shifts rightward, and the market price fals firms enter the industry, the macket supply curve shifts rightward, and the market price rises firms exit the industry, the market supply curve shifts rightward. and the market price fallsP P₂ B C Q₂ D MC Firm entry occurs. Output Quantity Refer to the above figures for the typical firm in a competitive market. If the market demand curve is D3, what happens in the long run? A Firm exit occurs. ATC Most firms do nothing. D₂ Some existing firms increase capital input. D₂ D₁ QuantityPRICE (Dollars per bushel) 3. Study Questions and Problems #3 Suppose the market equilibrium price of wheat is $4 per bushel in a perfectly competitive industry. On the following graph, use the green line (triangle symbol) to plot the demand curve for a single wheat farmer. 10 2 7 3 456 QUANTITY (Thousands of bushels) 10 Demand ? True or False: The individual wheat farmer is a price taker because wheat is a homogeneous product. True False
- A company in a competitive market has fixed costs of $200. A total cost curve is given in the table below. Given the data, answer the questions below. Output: 10 20 30 40 50 60 Total Cost:300 420 560 720 900 1100 a. Given the price is $20, what is the profit-maximizing output? What is the profit? b. Given the price is $20, what will happen in the long run? c. At the long-run equilibrium, what will the price be in the long run? What is the profit-maximizing output? What is the profit of the company? d. Prepare marginal cost schedule cost schedule for the firm.Could you solve the 4. question as follows shut down and operate TR= TFC= TVC= TC = PROFİT= The demand curve and supply curve for a perfectly competitive market are: Q = 500 – 5P and Q = 320 + P. The short run cost function of a representative firm in this market is TC = 150 + 3q2. According to these information Calculate the equilibrium price and quantity for this market. Calculate the profit maximizing output of this representative firm. Calculate the profit of this firm. Analyze this firm’s position in terms of shut down condition. Should this firm operate or shut-down in the short run. If all firms had the same cost structure, how many firms would compete at the equilibrium price computed in (a) above?Why does a firm in perfect competition produce the quantity at which marginal cost equals price? In a perfectly competitive market, the price of a handsaw is $25. When a firm maximizes its profit, it produces 6 handsaws a day. Draw the marginal revenue curve. Label it. Draw the marginal cost curve that illustrates the profit-maximizing output. Label it. Draw a point at the profit-maximizing output and price. A firm produces the quantity at which marginal cost equals price because when marginal cost is greater than price, the firm O A. can increase economic profit by producing 1 less handsaw O B. is maximizing economic profit OC. is at its shutdown point O D. can increase economic profit by producing 1 more handsaw 50- 45- 40- 35 30- 25- 20- 15- 10- 5 0- 0 Price (dollars per handsaw) 10 Quantity (handsaws per day) >>> Draw only the objects specified in the question.
- PRICE (Cents per bushel) COST (Cents per bushel) 100 90 80 70 60 50 ATC 40 30 20 10 AVC MC 0 5 10 15 20 25 30 35 40 45 50 OUTPUT (Thousands of bushels) The following graph shows the market demand for wheat. 1. Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) 2. Place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.) 100 90 80 60 30 20 2 2 2 2 8 8 2 2 2 2 ° 0 Demand 350 700 1050 1400 1750…Economics You are the owner of a firm in a perfectly competitive market. The market supply and demand are given by the equations: D: P=8 - 0.1Q S: P = 0.2 + 0.05Q Your firm's marginal cost curve and total cost curve are: - 0.1 + 0. 2q 20. 425 + 0. 1q +0. 1q² MC TC Assuming that your firm is similar to the other firms in the industry, what do we expect to happen to the equilibrium price in this market in the long run? The price will stay as it is now. The price will decrease as firms exit the industry and supply decreases. OThe price will increase as other firms enter the industry and supply increases. The price will increase as firms exit the industry and supply decreases.Suppose that the demand curve faced by a firm is downward sloping. Which of the following statements is true? Question 5Answer a. The firm faces constantly changing production technology b. The firm operates in a perfectly competitive market c. The firm’s marginal revenue is equal to the market price d. The firm is not a price-taker
- How does an increase in market demand for a product in a perfectly competitive market affectthe short-run and long-run equilibrium? Show on a diagram and discuss the adjustments firms make in terms of price and quantity to reach the new equilibrium. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.These diagrams, pertain to a perfectly competitive firm producing output q and the industry in which it operates. In the long run we should expect: MC ATC AVC MR P Ono change in the number of firms in this industry. firms to leave the industry, market supply to fall, and product price to rise. firms to leave the industry, market supply to rise, and product price to fall. firms to enter the industry, market supply to rise, and product price to fall.Consider the following graph and choose the correct option: MC $18 E АТС AVC 14 12 B - 10 Minimum average variable cost 3 3.5 4 5 Quantity of tomatoes (bushels А None of the answers are correct В The short-run supply curve of this firm is the portion of the MC curve starting at point C The short-run supply curve of this firm is the portion of the MC curve starting at point A The short-run supply curve of this firm is the portion of the MC curve starting at point B
