Which one of the following is true for a firm under perfect competition when all firms face identical costs? O t can earn supernormal profits in the short run but only normal profits in the long run. O Whether it earns normal or supernormal profits in both the short and the long run will depend on the conditions in that particular industry. O I t can earn supernormal profits in the long run but only normal profits in the short run. O I t can earn only normal profits in both the short and the long run. O t can earn supernormal profits in both the short and the long run.

Which one of the following is true for a firm under perfect competition when all firms face identical costs? O t can earn supernormal profits in the short run but only normal profits in the long run. O Whether it earns normal or supernormal profits in both the short and the long run will depend on the conditions in that particular industry. O I t can earn supernormal profits in the long run but only normal profits in the short run. O I t can earn only normal profits in both the short and the long run. O t can earn supernormal profits in both the short and the long run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
Perfect competition is great for consumers, but not for producers. Present a perfect competition equilibriumusing the average cost and marginal cost curve framework used in class, and explain using words why thisequilibrium is good for consumers but not for firms. Then, assume the firm innovates in a way that gives thefirm market power and provides the firm with an economic profit. In a second diagram, show the situationfor this firm after the innovation. Use your results to explain using words why free market capitalism tendsto provide an improving living standard for consumers over time.
Suppose solar panel manufacturing is an industry subject to significant economies of scale, and there are currently three solar panel manufacturers all with identical costs. If the demand for solar panels is 5 times the quantity produced at the bottom of the long-run average cost curve, which of the following is most likely to happen to the solar panel manufacturing industry in the long run? O The number of solar panel manufacturers will increase O The price of solar panels will increase O The fixed costs of manufacturing solar panels will increase The quantity supplied of solar panels will decrease
Firm Market Demand s, S, ATC P. ----+ LAVO MC Quantity Quantitv If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and v indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. O The quantity supplied by each firm will decrease. Marginal cost will decrease. O The total quantity supplied to the market will decrease. O Average total cost will decrease. The price of fertilizer will increase. Price and Costs Price
Question 5 Consider the graph below. Should this firm stay open or shut down in the short run and why? MC ATC ATC* AVC P* -MR B AVC* 10 O 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 Shut down because their loss from operating is less in magnitude than their fixed costs
Now consider any perfectly competitive market and suppose there are 'n' firms in the market in the long-run initially, but then the product becomes super-trendy and demand doubles. How many (new) firms enter the market? Whydon’t you need to know the cost and demand curves?
The industry in the figure below consists of many firms with identical cost structures, and the industry experiences constant scale. Consider a change in demand from D₁ to D2, which increases price from $20 to $30 in the short run. Price $50 $40 $30 $20 $10 0 10 20 Market 30 D₁ 40 Quantity S₁ D₂ 50 60 70 Tools LRS O S₂ Instructions: Enter your answers as a whole number. a. Draw the new short-run market supply curve that will occur in response to the increase in demand and increase in price. Instructions: Use the tool provided 'S2' and be sure your supply curve includes the new equilibrium price and quantity. b. Draw the long-run supply curve. Instructions: Use the tool provided 'LRS' and plot only the endpoints over the entire range of output (0-60). The new equilibrium price is $ 20 and the new equilibrium quantity is 40.
ume the pizza market is a perfectly competitive constant cost industry, and all firms have identical homogenous firms). The market demand and market supply functions for this perfectly competit stry are given below. L 0 1 2 3 4 5 6 7 8 9 q=TP 0 10 20 30 40 50 60 70 80 90 TC 100 205 2.45 280 340 430 545 720 930 1190 P = 30.5-.005Q P = 1.7+.003Q TFC TVC 100 0 100 105 20.50 10.50 100 145 12.25 7.25 100 180 9.33 6.00 100 240 8.50 6.00 100 330 8.60 6.60 100 445 9.08 7.42 100 620 10.29 8.86 100 830 11.63 10.38 100 1090 13.22 12.11 ATC AVC MC 10.50 4.60 3.50 6.00 9.00 11.5 17.50 21.00 26.00
Convey how purely competitive firms can use the total-revenue–total-cost approach to maximize profits or minimize losses in the short run.
I have asked this question and I was given an answer that D is the correct option.... but it is wrong The equilibrium of a competitive industry is: A neither efficient nor equitable B equitable but not necessarily efficient C efficient D not always efficient
Last answer was wrong. Don't give incorrect answers plz