Price, TR, MR 0 Quantity A B Refer to the above graph for a firm in pure competition. Line B is horizontal because: 1) total revenue is greater than marginal revenue. 2) marginal revenue is greater than total revenue. 3) the firm has a perfectly inelastic demand curve. 4) the firm has perfectly elastic demand curve.

Price, TR, MR 0 Quantity A B Refer to the above graph for a firm in pure competition. Line B is horizontal because: 1) total revenue is greater than marginal revenue. 2) marginal revenue is greater than total revenue. 3) the firm has a perfectly inelastic demand curve. 4) the firm has perfectly elastic demand curve.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 32CTQ: Your company operates in a perfectly competitive market. You have been told that advertising can...

See similar textbooks

Similar questions

The folowing diagram shows the curves for perceived demand, marginal revenue, and cost for Manuela's Pizza, which serves Mexican-style pizza. Manuela's is one of many other fast food restaurants in this town. MC Price and Cost ATC Demand Quantity of piezas Which statement describes the transibon to the long nun? Select the best answer. O More fast food restaurants will enter the market, and Manuela's demand curve will become more elastic. Manuela's will raise its prices since there is a large demand for its pizzas. O More fast food restaurants will enter the market, and Manuela's demand curve will become more inelastic. Manuela's will experience lower costs of production because it will expand its output.
Refer to the demand schedule below. a. Use the following demand schedule to calculate total revenue and marginal revenue at each quantity. Instructions: Enter your answers rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Quantity Demanded (Q) Price (P) Total Revenue Marginal Revenue $7.00 0.00 6.50 24 6.50 %24 6.50 6.00 12.00 $ 5.50 5.50 %24 16.50 24 4.50 5.00 4. 24 20.00 %24 3.50 4.50 24 22.50 $ 2.50 4.00 %24 24.00 $ 1.50 3.50 %24 24.50 24 0.50 3.00 8. 24.00 24 -0.50 2.50 22.50 24 -1.50 26 Tools 24 TR 22 20 TR D. 18 16 14 12 MR 10 8. 4 D. MR -2 0 1 2 3 4 5 6 7 8 9 10 Quantity Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a…
1.i) Assuming you are the managing director of a firm that produces goods: A,B and C .The price elasticity of demand for A is 1.2, for B it is 1.oo and C is 0.75. It is known that he's firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. If you were in a position to set the prices for these goods, what would be your pricing strategy for each product ii) price falls from N$ 16 to N$ 12 per bottle and demand rises from 200 to 300 per bottle.calculate the PED using midpoint formula Output prices average (total)cost Total cost marginal cost Total profit/loss 10 10 -108 20 10 4 -48 30 10 5 3 40 10 6.20 40 50 10 8 60 60 10 10 60 2. i) fill in the gaps ii)in which market structure doess Johnson Electronics (Pty)Ltd operate? iii)what level of output maximizes the firms profit
Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a price of $ to a price of $ to a price of $ d. In general, when marginal revenue is positive, demand is elastic When marginal revenue is negative, demand is inelastic e. Suppose the marginal cost of successive units of output is zero. What output would the profit-seeking firm produce? (Assume the firm can only produce whole units.)
a. Graph a purely competitive market showing the point of equilibrium at a price of $150 and a total product of 400,000. b. Next to this graph, graph the purely competitive firm. What price will the firm charge for the product? Will they charge $150, less than $150, or more than $150? c. Show the demand, average revenue, and marginal revenue curve on the graph for the firm. d. Show the profit maximizing quantity for the firm at 250 units of output, or tp. e. Show this firm making a profit of $5,000, making sure to solve for the numerical value for the ATC at the quantity, or tp, of 250, and showing the profit area on the graph.
Walkers’ Shoes reports the following demand schedule for its black brogues. Price 1600 800 400 200 100 50 25 12.5 Quantity Demand 2 4 8 16 32 64 128 256 What is the effect on Walkers Shoes’ total revenue of doubling the quantity of shoes which it supplies? What is the value of its marginal revenue? How does your answer relate to the value of the price elasticity of demand?
3. What is the meaning of ‘acceptable loss’ for a perfectly competitive firm ?Draw a graph and explain. 4. How can we increase the Total Revenue of products by using elasticity ?Explain them briefly.
Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product?
Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a price of $ to a price of $ to a price of $ d. In general, when marginal revenue is positive, demand is elastic When marginal revenue is negative, demand is inelastic e. Suppose the marginal cost of successive units of output is zero. What output would the profit-seeking firm produce? (Assume the firm can only produce whole units.)
16. The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barri- ers to entry. a. What level of output will maximize the firm's profit level? b. What price will the firm charge? c. How much revenue will the firm receive in this situation? How much is total cost? Total profit? d. How will the situation change over time?
There are several pen manufacturers in Corinthia. However, the pens sold by each manufacturer have a unique design. How will the demand for pens faced by the existing pen manufacturers in Corinthia be affected if new firms enter the industry in the long run? a. The demand curve faced by the existing firms will become perfectly elastic. b. The demand faced by the existing firms will decrease. c. The demand curve faced by the existing firms will become perfectly inelastic. d. The demand faced by the existing firms will increase.
QUESTION 1 If your fixed costs are $10,000, your variable costs are $10,000, and your revenue is $15,000, what do you do? You should shut down the firm. O You should shut down in the long run, but stay open in the short run. You shouldn't worry about profit. You should stay open. O You should follow the law of demand and cut your sales. QUESTION 2 If the elasticity of a product is -1, the best thing to do is: O drop the price O raise the price O leave it alone O bring the elasticity up to a positive number QUESTION 3 Game theory: O is used mostly in monopoly markets O never occurs when markets are in equilibrium helps a firm make strategy decisions considering the actions of other firms O is how consumers make rational economic decisions