Perfect competition is great for consumers, but not for producers. Present a perfect competition equilibriumusing the average cost and marginal cost curve framework used in class, and explain using words why thisequilibrium is good for consumers but not for firms. Then, assume the firm innovates in a way that gives thefirm market power and provides the firm with an economic profit. In a second diagram, show the situationfor this firm after the innovation. Use your results to explain using words why free market capitalism tendsto provide an improving living standard for consumers over time.

Perfect competition is great for consumers, but not for producers. Present a perfect competition equilibriumusing the average cost and marginal cost curve framework used in class, and explain using words why thisequilibrium is good for consumers but not for firms. Then, assume the firm innovates in a way that gives thefirm market power and provides the firm with an economic profit. In a second diagram, show the situationfor this firm after the innovation. Use your results to explain using words why free market capitalism tendsto provide an improving living standard for consumers over time.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 12P

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O See Hint The graph below shows the marginal cost curve for two firms, A and B. Assuming these two firms together completely dominate their market, draw the market supply curve. Use the straight-line tool, and set the endpoints of the line based on the endpoints of the two given lines. To refer to the graphing tutorial for this question type, please click here. Price and marginal cost 160 150 140 130 120 110 100 80 70 60 50 40 30 20 10 160 るろ 8さ88るるる Quantity supplied (thousands)
Question 3: The situation facing by firm “Smart”, a producer of running shoes, is shown in the following figure. Figure attached and can see in end What quantity does Smart Shoes produce? Answer: 2. What is the price of a pair of Smart shoes? Answer: 3. What is Smart’s economic profit or economic loss? Answer: 4. Why MR curve is below to demand curve? Answer: Question 4: In the market for running shoes, all the firms face a similar demand curve and have similar cost curves to those of Smart in question 3. a.) What happens to the number of firms producing running shoes in the long run? Answer: b.) What happens to the price of running shoes in the long run? Answer: c.) What happens to the quantity of running shoes produced by Smart in the long run? Answer: d.) What happens to the quantity of running shoes in the entire market in the long run? Answer: e. ) Does Smart shoes have excess capacity in the long run? Answer: f.) Why, if Smart firm shoes has…
Back Perfect. Comp Assignment.pdf 1. Draw a graph representing a perfectly competitive firm earning an economic profit. (Make sure to show both the firm and the industry graphs) What happens over-time, if many firms are earning economic profits? Is this good or bad for consumers? Explain. 2. Now draw a firm operating under perfect competition that is losing money but should still stay open in the short run. (Again, show both the firm and the industry graphs) lendar To Do A Notifications M Inbox
2. The table below shows information of 5 different competitive firms. What would those firms do in the short run and in the long run? Explain your answer! А В D E TR 3,250 3,250 5,000 4,100 | 1,700 TC 2,500 4,000 5,300 3,800 1,900 TFC| 1,000 500 1,200 800 100
Convey how purely competitive firms can use the total-revenue–total-cost approach to maximize profits or minimize losses in the short run.
PLEASE ANSWER ASAP When can you say that their is presence of a strong perfect competition?
a. John operates a firm producing t shirts. There are many such firms producingidentical products to John. What market structure is this? Is it possible for John tomake a profit in the long run? Illustrate using an appropriate diagram. b. John decides to innovate his business and begins printing t shirts with customercreated content. Will John be able to make a profit in the short run and the longrun? Explain using relevant diagrams and comment on the implied market c. Provide a strategy for John to make greater than normal profits in the long run. Isthis likely to be the case in the market for this good?
1) Briefly explain how the total revenue for a profit-seeking film is determined 2)Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs? 3)Contrast the rold of fixed costs and variable costs in economic decisions about future prodiction 4)Briefly compare and contrast the perceived demand curve for a monopolitically competitive firm and a perfectly competitive firm. 5)Briefly explain what quantity a profit maximizing monopolistic competitor will seek. Why not this type of competitive frim is productively efficient?
Please answer the question use this graph.
Suppose the book-printing industry is competitive and begins in a long-runequilibrium.a. Draw a diagram showing the average total cost, marginal cost, marginal revenue,and supply curve of the typical firm in the industry.b. Hi-Tech Printing Company invents a new process that sharply reduces the cost ofprinting books. What happens to Hi-Tech’s profits and to the price of books in theshort run when Hi-Tech’s patent prevents other firms from using the new technology?c. What happens in the long run when the patent expires and other firms are free touse the technology?
1. Assume the market for coffee mugs is perfectly competitive. Firms in themarket are producing output, but are currently making economic losses. a. How does the price of coffee mugs compare to the average total cost, the averagevariable cost, and the marginal cost of producing coffee mugs?b. Draw two graphs, side by side, illustrating the present situation for the typical firm andin the market.c. Assuming there is no change in either market demand or the firms’ cost curves,explain what will happen in the long run to the price of coffee mugs, marginal cost,average total cost, the quantity supplied by each firm, and the total quantity supplied tothe market.
3. Assume that the potato chip industry in the Northwest in 2009 was competitively structured and in long-run competitive equi- librium; firms were earning a normal rate of return. In 2010, two smart lawyers quietly bought up all the firms and began operations as a monopoly called "Wonks." To operate efficiently, Wonks hired a management consulting firm, which estimated long-run costs and demand. These results are presented in the following figure. MC-ΣMC AC D (E,MC; = the horizontal sum of the marginal cost curves of the individual branches/firms.) a. Indicate 2009 output and price on the diagram. b. By assuming that the monopolist is a profit-maximizer, indi- cate on the graph total revenue, total cost, and total profit after the consolidation. c. Compare the perfectly competitive outcome with the monopoly outcome. d. In 2010, an old buddy from law school files a complaint with the Antitrust Division of the Justice Department claiming that Wonks has monopolized the potato chip…