What will happen in a perfectly competitive industry in response to firms earning a positive economic profit? * O Firms will exit the industry. O The short-run industry supply curve will shift right. O The short-run industry supply curve will shift left. O Firm output will increase. Market price will increase

What will happen in a perfectly competitive industry in response to firms earning a positive economic profit? * O Firms will exit the industry. O The short-run industry supply curve will shift right. O The short-run industry supply curve will shift left. O Firm output will increase. Market price will increase

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 12SQP

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Consider the perfectly competitive market for apples, which is currently in long-run equilibrium. Now the government decreases the annual license fee, which is needed to operate the business. We would expect that O Firms enter the industry in the short-run O Firms decreases the quantity produced in the short-run O Firms make more money in the short-run O Firms increase the quantity produced in the short-run
Consider a competitive firm that is operating in the short run. The firm is maximizing profits and just breaking even. Assume it has to pay a monthly license fee of $100 and that the fee must be paid for as long as the firm operates. What should the firm do to maximize profits in the short run if the price of the license fee increases from $100 to $150? a. increase price Ob. increase output c. reduce output O d. not change output e. both a and c
13. Suppose a representative firm in a perfectly competitive industry has the following totalcost of production in the short run: TC=Q^3-40Q^2+600Q.a. What will be the long run equilibrium quantity for the firm? What will be the longrun equilibrium price in this industry?b. Let the industry demand be given by QD=12400-4P. How many firms will be activein the long-run equilibrium?c. Suppose the firm faces a positive demand shock that increases the industry demandto QD=16000-4P. Describe how the industry would respond and calculate thechange in the number of firms.
A perfectly competitive firm can produce its current level of output at an average total cost of $10 and a marginal cost of $8. If the market price of the product is currently $8, what should the firm do? a. The answer depends upon the relationship between price and average variable cost. The firm should shut down if average variable cost is $8 or greater, but the firm should continue to produce the current level of output if average variable cost is less than $8. O b. The firm should definitely shut down since average total cost exceeds price. Oc. The firm should continue to produce, but they should decrease production in order to increase profit. O d. The firm should increase production in order to increase profit. 0= Icon Key mentMain.do?takeAssignmentSessionLocator=assignment-take,53ef7eec-ce82-423c-a5cf-a72630d672e7#
Which describes the firms supply curve for the short run with perfect competition? O The section of MC that is above AVC O The section of MC that is above ATC There is no supply curve since it depends on the slope of demand O The section of ATC to the right of its intersection with MC Which describes the long run equilibrium situation for a firm in perfect competition? O Demand is sloping downward and tangent to ATC Demand is horizontal and tangent to the bottom of ATC O Demand is tangent to AVC O There are positive economic profits to motivate firms to keep producing
In a perfectly competitive market, when are economic profits possible? O Long-run O Economic profits are always zero, firms earn normal profit O Any time, it depends on the indivual firm O Short run
er 11 i Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice OO O the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged. 23 11,229 X OCT all Z A
m competing in a monopolistically competitive market. MC АТС P1 P2 P3 PA MR Q4 Q3 Quantity Q1 Q2 Price
Below is a model of a perfectly competitive firm. In the short run, to maximize profit, this firm will: $ 8 7 6 5 S 4 3 1 Produce Q* and earn an economic profit MC 0 5 10 15 20 25 30 35 40 45 50 O Exit the industry O Produce Q* and earn an economic loss O Shut down and produce Q* units of output Shut down and produce 0 units of output ATC AVC MR
How does an increase in market demand for a product in a perfectly competitive market affectthe short-run and long-run equilibrium? Show on a diagram and discuss the adjustments firms make in terms of price and quantity to reach the new equilibrium. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which of the following best describes the short-run supply curve for an individual perfectly competitive firm? Select one: a. It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. Ob. It is the upward-sloping part of the firm's marginal cost curve. O c. It is the firm's marginal cost curve. Od. It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.
A perfectly competitive constant cost industry is in long-run equilibrium. Due following best describes the effect on the industry? a change in tastes and preferences, there is a decrease in demand. Which of the The price will O A. decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero. O B. increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero. O C. decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero. O D. decrease, firms will produce more, profits will decrease, and more firms will exit until profit returns to zero.