The figure represents the cost curves of two firms operating in different perfectly competitive industries. This economy consists only of industries 1 and 2 If the market price in industry 1 is $3 and the market price in industry 2 is $4, we should expect in the long run. OA both firms to stay in their respective industries B. firm A to exit industry 1 and enter industry 2 OC. frm B to exit industry 2 and enter industry 1 OD. firm A to exit industry 1 and not enter industry 2 Price $11 9 7 5 3 1 0 FirmA in industry 1 J 20 40 V 60 80100 Quantity ATC Finoy Price 00 100 Qu

The figure represents the cost curves of two firms operating in different perfectly competitive industries. This economy consists only of industries 1 and 2 If the market price in industry 1 is $3 and the market price in industry 2 is $4, we should expect in the long run. OA both firms to stay in their respective industries B. firm A to exit industry 1 and enter industry 2 OC. frm B to exit industry 2 and enter industry 1 OD. firm A to exit industry 1 and not enter industry 2 Price $11 9 7 5 3 1 0 FirmA in industry 1 J 20 40 V 60 80100 Quantity ATC Finoy Price 00 100 Qu

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive, there must be O A. many buyers and a small number of firms that compete, selling identical products, and barriers to new firms entering the market. O B. many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market. OC. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market. O D. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market. O E. many buyers and sellers, with firms selling similar but not identical products, with low barriers new firms entering the market.
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Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?
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Profit is the incentive that drives our market economy. Firms make production, pricing, andhiring decisions based on their quest for profit. But what happens when a firm discoversthat it can make dramatically higher profits by stopping production altogether? In December2000, due to wild swings in the market for electricity, Kaiser Aluminium faced just such adecision.Kaiser Aluminium had contracted with Bonneville power for all of its electricity needs andfound itself in the unique position of being an electricity consumer and, potentially, anelectricity reseller. By December 2000, Kaiser faced a difficult decision of continuing itscurrent aluminium production and profit levels, or closing the plant to dramatically increaseits profit by simply reselling its electricity.When making production decisions, firms must consider both their costs and revenues. Oneimportant concern for many firms is utility costs. In 1996, Kaiser Aluminium Corporation inSpokane, Washington, entered into a…
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15 $40 $35 i of $30 ATC AVC $25 P = MR $20 $15 $10 $5 $0 20 40 60 80 100 120 Output (Q) The diagram above shows a Perfectly Competitive firm in the short-run. This firm will minimize its loss by choosing the Output (Q) level: Select one: а. 80 b. 60 С. 100 d. 40
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