The short-run supply curve of a firm operating in a perfect competition market is equal to the marginal cost (MC) curve remaining on the average variable cost (AVC) curve of the firm in question. Explain the reason for this with the help of the figure.

The short-run supply curve of a firm operating in a perfect competition market is equal to the marginal cost (MC) curve remaining on the average variable cost (AVC) curve of the firm in question. Explain the reason for this with the help of the figure.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section: Chapter Questions

Problem 7WNG

See similar textbooks

Related questions

Q: he graph shows the marginal cost (MC), average total cost TC), and marginal revenue (MR) curves for…

A: A perfectly competitive firm is a firm that gains a profit where the price is equal to MR. It…

Q: Assume that the market for Wheat is perfectly competitive in a country. Each firm operating in the…

A: a. In the short run a firm shut down its operation when its price is lower than the average variable…

Q: 100 90 80 70 60 ATC 50 40 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of…

A: please find the answer below.

Q: The top graph below shows the marginal cost (mc), average variable cost (avc) and average total cost…

A: In the long run, firms keep on entering exiting the market until the profits gets normalized. This…

Q: Using the following table, for each price level, calculate the optimal quantity of units for the…

A: A competitive market is a structure where no single consumer or producer has the ability to…

Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…

A: In a competitive market, there are large number of firms selling identical products. Firm's ATC is…

Q: 5. Profit maximization and shutting down in the short run Suppose that the market for microwave…

A: Profit maximization refers to a situation in which a firm is earning maximum profit by producing at…

Q: The graph below gives marginal costs (MC), average variable costs (AVC), and average total costs…

A: When P = MC = $1.5, Price (MC) is higher than AVC, so firm will continue to produce in short run. So…

Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…

A: According to the given graph, at P = 25, Quantity is taken from minimum of AVC which is, Q = 30000.…

Q: Suppose the figure to the right illustrates the cost curves or a firm in a perfectly competitive…

A: Productive efficiency refers to a state in which a firm produces goods and services at the lowest…

Q: Consider the competitive market for sports jackets. The following graph shows the marginal cost…

A: Marginal cost: The marginal cost is the incremental cost involved in producing one more unit of an…

Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…

A: Answer: Note: since the options for the blanks are not given my answer may differ. (1). Which of the…

Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…

A: Given: To Find: The firm's optimal quantity of units and the profit/loss: If the price is below,…

Q: Consider a firm in a competitive industry . The firm's average cost curve and marginal cost curve…

A: In the above diagram, the firm in a competitive industry produces output at a point where the…

Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…

A: Shutdown is the situation for firm in short run where they are recovering only variable cost and…

Q: nsider the competitive market for dress shirts. The following graph shows the marginal cost (MC),…

A: A shutdown point is a degree of tasks at which an organization encounters no advantage for…

Q: The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost…

A: We can see that one of the axis we see the cost and profit is given, the verticle axis.Here, the…

Q: The market for drones is perfectly competitive. Assume for simplicity that fractions of everything,…

A: Under perfect competition, an individual firm is a price taker in the market. All firms sell a…

Q: On the following graph, use the orange points (square symbol) to plot points along the portion of…

A: A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the…

Q: A market in perfect competition is in long-run equilibrium. What happens to the market if labor…

Q: Glowglobes are produced by identical firms in a perfectly competitive market. There are 18 firms in…

A: A short-run competitive equilibrium occurs when, given the businesses in the market, the price is…

Q: The curves show the marginal cost (MC), average variable cost (AVC), marginal revenue (MR), and…

A: The total cost incurred by a firm is the sum of fixed costs and variable costs. Fixed costs do not…

Q: The following diagram shows the market demand for titanium. Use the orange points (square symbol) to…

A: We are using market equilibrium concept in the long run to answer this question.

Q: Assume that a firm in a competitive market faces the following cost information. If the market price…

A: Firms in perfect competition are price takers as there are a large number of firms selling identical…

Q: Consider the competitive market for sports jackets. The following graph shows the marginal cost…

A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…

Q: A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of…

A: Given Information: The perfectly competitive firm produces output at which MR = MC. TC = $830,000 VC…

Q: The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total…

A: A competitive market is an expression in economics that implies a marketplace where there are a…

Q: What happens to a competitive firm whose cost function exhibits decreasing marginal cost everywhere?…

A: A competitive firm in a market is typically characterized as a price taker, meaning it accepts the…

Q: Using the following table, for each price level, calculate the optimal quantity of units for the…

A: Profits, in an economic and business context, refer to the financial gains or earnings that a…

Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…

A: The perfectly competitive market is a market type which is characterized by a large number of buyers…

Q: Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are…

A: The total amount of a particular commodity or service that all producers are willing and able to…

Question

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5
Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below. a.What is the level of profit for this firm at the profit maximizing output? b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find? c. What do you predict will happen in this market over the long run?
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per instant pot) (Instant pots) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per instant pot) (Instant pots) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed…
Economics Question
5. Profit maximization and shutting down in the short run Suppose that the market for cashmere sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 100 90 80 70 60 50 АТC 40 30 AVC 20 MC 10 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of sweaters) PRICE (Dollars per sweater)
Homework (Ch 14) 5. Profit maximization and shutting down in the short run Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 100 90 80 ATC 60 50 40 30 AVC 20 MC 10 20 25 30 35 40 45 50 10 15 QUANTITY (Thousands of ovens) PRICE (Dollars per oven)
The curves show the marginal cost (MC), average variable cost (AVC), marginal revenue (MR), and average total cost (ATC) curves for a firm that sells mid-range cars in a competitive market. Use the area tool to draw the area representing the firm's profit or loss, if the firm produces 6,000 cars. Your answer should be a rectangle drawn with four corners.
50 45 40 35 30 ATC 25 20 15 AVC 10 MC 2 4 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts) PRICE (Dollars per shirt)
The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.
The answer should be very detailed and clear, THANK YOU!!!
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers? Include a detailed set of graphs showing both the market and firm long run equilibration in reaction to the change.