For Questions 39 to 42, consider the following paragraph on long run dynamics of a perfectly competitive market. Choose the option that best fills the blanks. In a perfectly competitive market, the firms are observed to make positive economic profits inthe short run. Due to the positive profits, new firms enter the market. Hence supply_(39), causing the equilibrium price level to(40). This will(41) profits. The process will continue until the market equilibrium price_(42) function.corresponds to the minimum of the39. a) increasesb) decreases40. a) increaseb) decrease41. a) drive upb) drive down42. a) long run average costb) long run marginal cost

Perfectly competitive markets are those where there are large number of buyers and sellers and is…

Answered: In a perfectly competitive market, the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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)
Which of the following are characteristics of a perfectly competitive market? Check all that apply. There is a large number of firms in the market. Entry and exit are difficult. The product is homogeneous. There are very few firms. Does a Kansas wheat farmer operate in a perfectly competitive market structure? No, because there is no easy entry into or exit from the wheat market. Yes, because the wheat market conforms closely to the perfectly competitive market structure. No, because no real-world market closely fits the three assumptions of perfect competition. Yes, because there are very few wheat farms.
The graph shown displays the cost curves for a firm in a perfectly competitive market. If the market price is $100, which of the following statements is true?graph_q10 This firm will earn positive profits in the short run. In the long run, the market supply curve will increase. Profits for this firm will decrease in the long run. I only I and II I and III I, II and III
Consider the perfectly competitive market for tofu. Tofu production requires special inspections because of potential allergic reactions in consumers. Starting from long-run equilibrium, show graphically what happens in the short and long run to q. Q, P, and it in the market for tofu (in comparison to the starting point) if the US government decides to impose less stringent inspection requirements before any production can actually start.
In a perfectly competitive market... Group of answer choices It will eventually reach long-run equilibrium. Economic profits will be driven down to zero in the short run Firms will compete for business by setting different prices at or above the prevailing equilibrium price A few firms will dominate the market share.
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 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.
QUESTION 8 Which of the following is true in the long run equilibrium of a perfectly competitive market? price (P) marginal cost (MC)
For Questions 39 to 43, consider the following paragraph on long run dynamics of a perfectly competitive market. Choose the option that best fills the blanks. Please answer the all questions 39,40,41,42,43!!!!!!!
In the above figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce?
Firms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is $0.40, the average total cost is $0.70, and the marginal cost is $0.50. (a) What would you expect the firm to do in the short run? Explain.

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