Suppose Adam's Apples, a small firm supplying apples in a perfectly competitive market, decides to cut its production in half this year. As a result, the 1. market price will rise market price will fall market quantity will rise the firm's revenues will be cut in half а. b. с. d. A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry's output in the long run? The number of firms remains constant and the industry's output increases. The number of firms increases and the industry's output increases. The number of firms remains constant and the industry's output decreases. The number of firms decreases and the industry’s output decreases. 2. а. b. с. d. It would make no sense for an individual seller in perfect competition to sell at a price lower than the market price because 3. the seller can sell any quantity she wants at the prevailing market price quantity demanded of the product would exceed the quantity supplied the sellers would start a price war. demand is perfectly inelastic. а. b. с. d.

Suppose Adam's Apples, a small firm supplying apples in a perfectly competitive market, decides to cut its production in half this year. As a result, the 1. market price will rise market price will fall market quantity will rise the firm's revenues will be cut in half а. b. с. d. A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry's output in the long run? The number of firms remains constant and the industry's output increases. The number of firms increases and the industry's output increases. The number of firms remains constant and the industry's output decreases. The number of firms decreases and the industry’s output decreases. 2. а. b. с. d. It would make no sense for an individual seller in perfect competition to sell at a price lower than the market price because 3. the seller can sell any quantity she wants at the prevailing market price quantity demanded of the product would exceed the quantity supplied the sellers would start a price war. demand is perfectly inelastic. а. b. с. d.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 8PA

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Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
Suppose that bicycles are produced by a perfectly competitive, constant-cost industryWhich of the following will have a larger effect the long-run price of bicycles: a government program to advertise the health benefits of bicyclingor (2) a government program increases the demand for steel, an input in the manufacture of bicycles that is produced in an increasing cost industry ? O. Option 1: shifts the demand curve out and increases the price. O. Option 2: shifts the supply curve up and increases the price O. Option 2: it shifts the demand curve up and increases the quantity. O. Option 2: shifts the supply curve up and increases the quantity.
Suppose solar panel manufacturing is an industry subject to significant economies of scale, and there are currently three solar panel manufacturers all with identical costs. If the demand for solar panels is 5 times the quantity produced at the bottom of the long-run average cost curve, which of the following is most likely to happen to the solar panel manufacturing industry in the long run? O The number of solar panel manufacturers will increase O The price of solar panels will increase O The fixed costs of manufacturing solar panels will increase The quantity supplied of solar panels will decrease
31) What is total fixed cost at the profit-maximizing quantity? 32) When the process of entry and exit has ended in a competitive market, are firms’ profits positive, negative, or zero? Why is this true? 33) When a single firm can supply a good or service to an entire market at a lower cost than could two or more firms, the industry is known as a?
3.3 Frances sells pencils in the perfectly competitive pencil market. Her output per day and her costs are as follows: Variable Cost Output per Day Total Cost АТС AVC MC $1.00 2.50 1 2 3.50 3 4.20 4 4.50 5.20 6. 6.80 7 8.70 8. 10.70 a. If the current equilibrium price in the pencil market is $1.80, how many pencils will Frances produce, what price will she charge, and how much profit (or loss) will she make? (1)
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Wheat is produced in a perfectly competitive market. Market demand for wheat increases. This will cause the individual wheat farmer's marqinal revenue to maximizing level of output to and their profit- O a. decrease; increase O b. decrease; decrease O c. increase; increase d. increase: decrease
Price and cost (dollars per mug) NA a ∞ ONA a 16 0 5 10 15 20 25 30 35 40 45 50 Quantity (mugs per day) $160; $280 The figure above shows Mollie's Mugs' costs producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is per day and it incurs an economic loss of per day. $8; $14 MC $0; $120 ATC AVC $0; $6