Per-unit cost (P) P = 12 10 8 80 90 100 Marginal Cost long run, Average Cost Average Variable Cost Output The figure above shows the Marginal Cost, Average Cost, and Average Variable Cost for an individual firm in a perfectly competitive market, along with the prevailing market price of 12. At the current equilibrium, the firm is producing + units of output, resulting in achieving the long-run market price equal to Suppose the market price decreases to $7 per unit. In the short run, the firm will ◆ ◆ profit. In the long run, and earn profit. In the
Per-unit cost (P) P = 12 10 8 80 90 100 Marginal Cost long run, Average Cost Average Variable Cost Output The figure above shows the Marginal Cost, Average Cost, and Average Variable Cost for an individual firm in a perfectly competitive market, along with the prevailing market price of 12. At the current equilibrium, the firm is producing + units of output, resulting in achieving the long-run market price equal to Suppose the market price decreases to $7 per unit. In the short run, the firm will ◆ ◆ profit. In the long run, and earn profit. In the
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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blank one options: 0 , OR 80, OR 90, OR 100
blank two options: zero, OR negative, OR positive
Blank three options: firms will enter the market, OR firms will exit the market, OR the firms in the market will be unchanged
Blank four options: 0, OR 8, OR 10, OR 12
blank five options: stay open, OR shut down
blank six options: zero, OR negative, OR positive
Blank seven options: more firms will enter the market, OR more firms will exit the market, OR the firms in the market will be unchanged
Transcribed Image Text:Per-unit cost (P)
P* = 12
10
8
I
I
I
long run,
80 90 100
Marginal Cost
Average Cost
Average
Variable Cost
Output
The figure above shows the Marginal Cost, Average Cost, and Average Variable Cost for an individual firm in a perfectly competitive
market, along with the prevailing market price of 12.
At the current equilibrium, the firm is producing
◆ units of output, resulting in
achieving the long-run market price equal to
Suppose the market price decreases to $7 per unit. In the short run, the firm will
profit. In the long run,
and earn
profit. In the
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