18IV1614II12AP1=MR1108.BPo=MRo0 24 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34QuantityUtilize the graph above, which illustrates average fixed costs, average variable costs,average total costs, and marginal costs of production for a firm in a perfectly competitivemarket, to answer the following question.If the price is P1 what should the firm do?O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess themarket conditions to see whether they should reopen for business or exit the market.The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, thefirm has not maximized operating profits.O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which willCost41

The given graph below highlights the perfectly competitive market Therefore I represents Average…

Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do?

Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The following graph plots daily cost curves for a firm operating in the competitive market for demin overalls. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per overalls) 50 10 10 5 0 MC 2 ATC 8 18 QUANTITY (Thousands of overallises per day) AVC 10 20 Profit or Loss In the short run, given a market price equal to $15 per overalls, the firm should produce a daily quantity of On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $15 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a short-run thousand per day for the firm. $ overallses.
The graph shows the Cost curves for a profit maximizing firm in a competitive market. If the market price is $30 and the firm produces at the profit maximum quantity, what is the amount of the total fix cost
What does zero economic profits in the long-run mean to the owner of a business operating in a perfect competitive market?
In competitive markets, there are many small firms with each firm unable to influence the market price. Suppose company ABX operates in the wheat market. The company produces and markets wheats at a Price = $20 per container. The firm’s total costs are given as: TC = 50 +2Q + 3Q2 What is the firm Fixed Cost? Why? Also, use a graph to support your answer
Suppose that the market for dress shirts is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 50 18, 42 45 40 35 30 ATC 25 20 15 AVC 10 MC 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per shirt) (Shirts) (Dollars) (Dollars) (Dollars) (Dollars) 12.50 7,500 135,000 27.50 135,000 45.00 135,000 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…
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. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point.
A10
A catering company producing fruit ice, in the Tandy school, has a production function q = 10min(k,l), where k is capital and 1 is labor. a. 15% If v = 81000 and w = 500 and P = 8600, where v, w, and P are as per the lecture notes, how many units of fruit ice will be produced and how much profit will be obtained? b. 10% Draw the supply curve for this catering company.
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. PRICE (Dollars per oven) 100 90 80 70 40 30 20 10 0 0 5 0 MC ATC AVC 10 15 20 25 30 35 QUANTITY (Thousands of ovens) 40 45 50 (?)
Marvin’s Milk Farm produces milk and sells it in a perfectly competitive market at $4 per bottle. The following table shows Marvin's weekly total and marginal product schedules, using labor and capital. Assume that labor and capital may be used independently; that is, one is not needed for the other factor to be productive. Therefore, the total amount of milk that Marvin's produces is obtained by adding together the amount of milk produced by labor and the amount of milk produced by capital. The table also shows total revenue and marginal revenue products (MRP) of labor and capital. Finally, assume that Marvin's Milk Farm is a factor price taker in the labor and capital markets. Labor costs $48 per week, and capital costs $72 per week.
teach this
What happens to a competitive firm whose cost function exhibits decreasing marginal cost everywhere? Construct a concrete cost function of this type and carry out the search for the profit-maximizing output.