When firms in a competitive market are experiencing zeroeconomic profits, one can assume thatO they should be producing a different product.sthere is currently no better way to use society's scarceresources.O they will eventually go bankrupt.O accounting losses are being experienced by these firms.

A zero economic profit means that the firm is covering all of its cost, inclusive of the opportunity…

When firms in a competitive market are experiencing zero economic profits, one can assume that O they should be producing a different product. 4 there is currently no better way to use society's scarce resources. they will eventually go bankrupt. accounting losses are being experienced by these firms.

When firms in a competitive market are experiencing zero economic profits, one can assume that O they should be producing a different product. 4 there is currently no better way to use society's scarce resources. they will eventually go bankrupt. accounting losses are being experienced by these firms.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 18P

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Similar questions

A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Why will profits for films in a perfectly competitive industry tend to vanish in the long run?
Under which of the folowing examples is t likaly that the accounting profit is positive and the economic profit is negative? OA Using a restaurant you purchased to sell Menican food instead of talian food. OR It you use a diamond mine as a touriet atraction instead of using it for mining. Oc Opering a bank branch near a university campus. OD. Such a scenario, where accounting cost is positive and economic profit is negafive, is not possibie.
Which is most hkely to be a constant cost industry? O a Widgits do not require specialized equipment or workers, and Widgits have been produced the same way for a long time O b. Gadgets require a special metal, and the world is starting to run out of this metal Oc Gruffles require a special metal, and people have just started to use this metal. Now, engineers are quickly finding better ways to mine this metal. Od. These are all equally likely to be constant cost industries Oe. None of these could be constant cost industries In Canada, here is the market for Woogets Quantity Demanded- 300 - P Quantity Supplied = 2P The world price is 50, and Canadians can buy and sell as much as they want at this price. What is consumer surplus in Canada, if there is completely open trode? Write the answer as a number. For example, if you think the answer is 100,971, write 100971
conl This Question: 1 pt in M sign Hom e a The graph shows the average variable cost curve and average total cost curve for a firm that produces candles. Draw the firm's marginal cost curve. Label it. When the marginal cost of producing an output exceeds its average variable cost but is less than its average total cost, OA. total variable cost is at its maximum value OB. average variable cost is increasing while average total cost is decreasing OC. average fixed cost is increasing OD. both average variable cost and average total cost are increasing Click the graph, choose a tool in the palette and follow the instructions to create your graph. APR 97 36 7- 6- 5- Cost (dollars per candle) ATC AVC 10 20 15 Output (candles per day) >>> Draw only the objects specified in the question. 25 30
essay (on this firm) argues that, the firm would be better off by closing down. Do you a unit of output of this company is Birr L3. A student working on his senior A company in a perfectly competitive market has a total cost function given as: 6. TC 50+40+ The price agree? Explain By using the knowledge of relationshins among the various cost concepts, fill the bia cells of the following table. Quantity TFC TVC TC MC AFC AVC ATC 50 50 64 98 162 26 20 finms (Fi and Fa) producing identical product competing for like to dominate the other, if possible. They each defends
Problem 2: Average total cost, from “Principles of Economics” by N. Gregory MankiwYou are the chief financial officer for a firm that sells gaming consoles. Your firm has thefollowing average-total-cost schedule:Quantity | Average total cost600 $300601 $301Your current level of production is 600 consoles, all of which have been sold. Someone calls, desperateto buy one of your consoles. The caller offers you $550 for it. Should you accept the offer? Why or whynot?
1. A firm has three different production facilities, all of which produce the same product. Whilereviewing the firm’s cost data, Ron, a manager, discovered that one of the plants has a higher averagecost than the other plans and suggests closing this plant. Another manager, Jack, notes that the high-cost plant has high fixed costs but that the marginal cost in this plant is lower than in the other plants.He says that the high-cost plant should not be shut down but should expand its operations. Who isright? 2. Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.
QUESTION 1 DA MC ATC AVC Quantity Observe the graph above. Based on the original price being set at P1, what assumptions would you make about the company's condition and what might happen O The company is profitable and making a very good profit O Company is barely at the break-even point or even below that point because the price of the product is set to cover just its variable costs which means the company would not survive long if the price of P1 remains the same O Company is making small profits in the short run O None of the above.
D Question 6 Consider the graph below. Should this firm stay open or shut down in the short run and why? ATC MC ATC* A AVC* pe 10 Stay open because their loss from operating is greater in magnitude than their fixed costs Stay open because their loss from operating is less in magnitude than their fixed costs Shut down because their loss from operating is greater in magnitude than their fixed costs O Shut down because their loss from operating is less in magnitude than their fixed costs B AVC -MR