The graph illustrates the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. It's important to note that, for such a firm, the demand (D) curve coincides with the marginal revenue (MR) curve. The cost curves depicted here represent those of other firms within the industry.### Graph Details:- **Axes**: - The vertical axis represents the cost and revenue in monetary terms (MR/MC in dollars). - The horizontal axis represents quantity.- **Curves**: - **ATC (Average Total Cost)**: This is shown as a red curve that initially slopes downward and then rises. - **MC (Marginal Cost)**: This is shown as a blue curve that initially decreases and then increases sharply, intersecting the ATC curve. - **D = MR (Demand = Marginal Revenue)**: This is depicted as a horizontal turquoise line, indicating constant marginal revenue, which is characteristic of perfectly competitive markets.### Questions:1. **Given the current price, this firm will** - earn zero economic profit. - earn a negative economic profit. - earn a positive economic profit.2. **In the long run, this market will** - experience exit by some firms. - experience entry of additional firms. **Question: What is going to happen to the price of this product?**Options:- ○ It will decline.- ○ It will increase.- ○ It will stay the same.

# a competitive firm produces output where P=MC. At this P=MC, from the given figure it is easy to…

The graph shows the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. Note that the demand (D) curve is the same as the MR curve for such a firm. Assume that the ATC cost curves are representative of other firms in the industry. Given the current price, this firm will D= MR MC earn zero economic profit. earn a negative economic profit. earn a positive economic profit. Quantity In the long run, this market will experience exit by some firms. experience entry of additional firms. MR/MC ($)

The graph shows the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. Note that the demand (D) curve is the same as the MR curve for such a firm. Assume that the ATC cost curves are representative of other firms in the industry. Given the current price, this firm will D= MR MC earn zero economic profit. earn a negative economic profit. earn a positive economic profit. Quantity In the long run, this market will experience exit by some firms. experience entry of additional firms. MR/MC ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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