P₁ P₂ P₂ C Q₂ D MC Q₂ Q₂ Output Quantity Refer to the above figures for the typical firm in a competitive market. If the market demand curve is D₁, what happens in the long run? A B Firm entry occurs. Firm exit occurs. ATC Most firms do nothing. X D₂ Most firms incur an economic loss. Quantity

P₁ P₂ P₂ C Q₂ D MC Q₂ Q₂ Output Quantity Refer to the above figures for the typical firm in a competitive market. If the market demand curve is D₁, what happens in the long run? A B Firm entry occurs. Firm exit occurs. ATC Most firms do nothing. X D₂ Most firms incur an economic loss. Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the graph below, if the price of the good is $17, then the result for the perfectly competitive firm will be: Graph: Short-run profit and loss Price MC ATC AVC 1S 13 Quantity Select one: a. making a long-run loss and so it will shut down. b. making a short-run loss but it will continue to produce. c. making a long-run profit. d. making a normal profit.
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.
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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
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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.