The graph below depicts the cost structure for a firm in a competitive marke Price PP P4 P3 P₂ P₁ MC AVC Q3 QA Q₁ Q₂ When prices rise from P2 to P3 the firm finds that: a. marginal cost exceeds marginal revenue at a production level of Q2. b. if it produces at output level Q3 it will earn a positive profit. Oc. expanding output to Q4 would leave the firm with losses. d. it could increase profits by lowering output from Q3 to Q2. ATC Quantity

The graph below depicts the cost structure for a firm in a competitive marke Price PP P4 P3 P₂ P₁ MC AVC Q3 QA Q₁ Q₂ When prices rise from P2 to P3 the firm finds that: a. marginal cost exceeds marginal revenue at a production level of Q2. b. if it produces at output level Q3 it will earn a positive profit. Oc. expanding output to Q4 would leave the firm with losses. d. it could increase profits by lowering output from Q3 to Q2. ATC Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Firm Market Demand s, S, ATC P. ----+ LAVO MC Quantity Quantitv If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and v indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. O The quantity supplied by each firm will decrease. Marginal cost will decrease. O The total quantity supplied to the market will decrease. O Average total cost will decrease. The price of fertilizer will increase. Price and Costs Price
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Question 25 Use the graph below to answer the following question: MC AVC # Q5 P4 P3 Ⓡ P2 ↑Price P1 Q1Q2 Q3 Q4 ATC Quantity If the market price is less than P3 and greater than P2, in the short run, the perfectly competitive firm will earn O positive economic profit zero economic profit. O negative economic profit and shut down. O negative economic profit but continue to produce output.
am. 122.
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