Price P₁ P2 Pa Pa If the short-run price is A) P1; break even B) P2; earn negative economic profit C) P3; earn positive economic profit D) P1; earn positive economic profit E) p4; break even Quantity MC AVC the perfectly competitive firm will ATC
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- ATC MC 50 40 AVC 30 20 8 10 11 12 Quantity (per day) a. If the price in this market is $50, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output. Show your calculations b. If the price decreases to $25. c) Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Explain your answer. d) Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium? Explain your answer. Price and costs (dollars)Use table to find the required values: Price $32 Quantity 400,000 Explicit costs $3,500,000 Implicit costs $4,100,000 (A) Calculate total revenue. (B) Calculate accounting profit. (C) Calculate economic cost. (D) Calculate economic profit.Based on the table below for a perfectly competitive firm: Quantity Fixed Variable Total Cost Cost Cost Marginal Cost ****: |10 20 200 50 200 100 250 300 5 500 20 1000X **** 30 40 200 300 200 800 (a) Find the marginal cost as X. (b) If the equilibrium price is $20, find the profit maximizing quantity. (c) How much profit will the firm earn?
- 3n A sellet in a perfectly competitive market can increase his profit in the short run by: Increasing his selling price above the market price 6 Docreasing his selling price so he sells more output Conducting an effective advertising campaign for his product PNone of the aboveSally owns and operates a pizza house. The diagram shows the cost and revenue curves for the pizza house. Initially, Sally sets her price to maximise profits. Corts Revenue ( # G : Quantity per day (1) Which market structure is this? Explain. (i) Calculate the profits made by Sally. Is this a long run or short run situation? Explain. (i) Calculate the change in total profit if Sally changes her objective from profit maxim Attach File Browse Content Collection Browse Local Files revenue maximisation. You are advised to show your workingRevenue and cost (dollars per unit) MC AVC 50 40 30 10 10 30 40 50 Output (units per day) The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss) the firm should A) produce 30 units. B) shut down. C) produce 40 units. D) produce between 10 and less than 30 units. E) produce more than 30 units and less than 40 units. 20 20
- PROBLEM (4) The short run market supply for shirts is QS = 50P – 1000 and the market demand isQD = 2800 – 50P Let a typical firm operating in a perfectly competitive industry has short-run total cost and marginal cost curves: TC(q) = 100 + 20q + q2 and MC(q) = 20 + 2q (a) Determine the short run market equilibrium price and quantity for this type of shirt.(b) Determine how much the typical firm will produce at the equilibrium price you found in (a).(c) If all firms had the same cost structure, how many firms should be operating in this industry at the moment? (d) Calculate the profit or loss of each firm at the short-run market equilibrium. If they are making losses, why are they still producing in the short run? In the long run, will there be entry into the market or exit from it?(e) What would the price be in the long run equilibrium, assuming constant cost industry?(f) In the long run equilibrium, how many shirts would each firm produce? What would be a firm’s net profit?(g) How…Price P₁ P2 P3 PA Quantity MC If the short-run price is. , the perfectly competitive firm will A) P1; break even B) P2; break even C) P3; earn positive economic profit D) P4; earn positive economic profit E) P2; negative economic profit AVC ATCan A seller in a perfectly competitive market can increase his profit in the short run by: Increasmg his selling price above the market price Decreasing his selling price so he sells more output Conducting an effective advertising campaign for his product d None of the above
- Prices AG MR. Figure 3 17) The competitive firm's supply curve corresponds to the marginal cost curve above the price shown in Figure 3 as (a) P. (b) Pa (c) P. (d) P. (e) PsJustin’s Jeans sells in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $33 per unit, and the total fixed cost is $30.(a) Identify the profit-maximizing quantity. Explain using marginal analysis. (b) Calculate the economic profit at the profit-maximizing quantity you identified in part (a). Show your work.(c) Calculate the average fixed cost of producing 6 units. Show your work.(d) Based on your answer to part (b), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.(e) Based on your answer to part (b), will the market price increase, decrease, or stay the same in the long run? Explain.(f) The income elasticity of demand for Good M is 1.4, and the cross-price elasticity of demand for jeans with respect to the price of Good M is −0.75. Based on your answer to part (e), what will happen to the demand for jeans? Explain.(g) Now assume that the market in which…Price P₁ P2 Ps PA MC ATC AVC If the short-run price is A) P1; break even Quantity , the perfectly competitive firm will B) P2; earn negative economic profit C) P3; earn positive economic profit D) P1; earn positive economic profit E) p4; break even