CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 4RQ
To determine
Relevance of perfect competition .
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Given the information in the table is this a competitive or non-competitive firm? In the short run, how many units should the firm produce to maximize its profit?
Output
Total Revenue
Marginal Cost
$0
$6
$1
2.
$12
$2
3.
$18
$3
4.
$24
$5
$30
$7
O A. non-competitive; 3
O B. non-competitive; 0
OC. competitive; 4
O D. competitive; 5
O E. competitive; 0
O F. non-competitive; 5
O G. there is not enough information to determine whether it is a competitive or non-competitive firm; 4
Reset Selection
SK THE SL.mp3
Search for anything
Suppose that the pen-making industry is perfectly competitive. Also suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum ATC = $1.25 per pen. If the market equilibrium price of pens is currently $1.50, what would you expect it to be in the long run? LO11.2 a. $0.25. b. $1.00. c. $1.25. d. $1.50.
If a graph of a perfectly competitive firm shows that the MR-MC point occurs where MR (which is equal to the price for perfectly competitive firms) is below AVC and ATC,
Ⓒa. the firm is earning negative profit, but will continue to produce where MR=MC in the short run.
O b. the firm is earning negative profit, and will shut down rather than produce that level of output.
O c. the firm can cover all of fixed costs but only a portion of variable costs.
O d. the firm is covering explicit, but not implicit, costs.
O e. the firm is still earning positive profit, as long as variable costs are covered.
Knowledge Booster
Similar questions
- Price and costs (dollars) 20 10 L O 10 20 MC O always. ATC MR 40 30 Quantity (per day) The figure above shows a perfectly competitive firm. In the short run, the firm will shut down only if the AVC of producing 10 units is more than $20. only if the AVC curve reaches its minimum before 10 units are produced. only if the AVC of producing 10 units is less than $20.arrow_forwardConsider the following data facing a perfectly competitive firm: price = $20, quantity of output produced = 600 units, average total cost = $16, average fixed cost = $12, and marginal cost = $22. This firm should O a. increase output to maximize profit. O b. not change output in the short run since profit is already maximized. O c. shut down immediately. O d. reduce output but not shut down in the short run to maximize profit. O e. raise price above $20 to maximize profit in the short run.arrow_forwardThe table below displays cost information for a firm operating in a perfectly competitive market. Fill in the missing values corresponding to the empty cells. Average Total Cost $33 Quantity Total Cost Variable Cost Marginal Cost 1 $33 $23 A $38 $15 3 $60 В 4 $54 D G $80 H 6 $88 F $16.33 A = $ type your answer.. B = $ type your answer.. C= $ type your answer. D = $ type your answer.. E = $ type your answer... F = $ type your answer. G = $ type your answer. H = $ type your answer.. Assume all firms in the market have identical costs. With free entry and exit, what will the market price be in the long run? $ type your answer.arrow_forward
- 3. Suppose the doll company American Girl has an inverse demand curve of P = 150 - 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. There production function equals Q = LO.5KO.5, they pay wages of 35 and they pay capital rates of 140. What is their daily long-run profit at the profit-maximizing output level?arrow_forwardConsider the following costs of a typical firm in a purely competitive industry. The firm has no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost 1 $16.00 2 15.00 $14.00 13.00 9.00 4 18.75 36.00 57.00 210.00 6 123.50 370.00 a. Given only the information available, what would you expect product price to be in the long run? O $9.00 $13.00 $18.75 $14.00 b. What would you expect price to be in the short run? $12.00 $10.00 $9.00 $14.00arrow_forward4. A firm in a purely competitive industry is currently producing 1,500 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $310, and if it produced 500 units per day, its total cost would be $175. a. What are the firm's ATC at these three levels of production? i. At 1,500 units per day, ATC = $. ii. At 1,000 units per day, ATC = $. III. At 500 units per day, ATC = $. b. If all firms have the same cost structure, what is the highest possible price per unit that could exist as the market price in long-run equilibrium?arrow_forward
- Complete the table above. Graph AVC , ATC, and MC on the same graph. Suppose market price is $30. How much will the firm produce in the short run? How much are total revenue? Suppose market price is $50. How much will the firm produce in the short run? What are total profits?arrow_forwardStuff, Incorporated is a firm with a total revenue of $1,000, marginal cost of $5, and average variable cost of $4. Both the output and input markets are perfectly competitive and Stuff, Inc. is in long run equilibrium. Stuff, Inc.'s output and total fixed costs must be equal to which of the following? O Output 200; Fixed Cost $200 O Output 200; Fixed Cost $400 O Output 200; Fixed Cost $800 O Output 250; Fixed Cost $800 O Output 250; Fixed Cost $400arrow_forwardSolve it correctly please. I will rate accordinglyarrow_forward
- Below are the long-run cost data of a representative firm in a perfectly competitive industry. In the long run, what is the equilibrium quantity produced? LMC LAC 1 12 84 17 51 23 45 25 42 5 32 37 6 36 36 39 38 44 40 52 42 10 56 45 Example on how to interpret the numbers: The LMC of the second unit (Q=2) is 17. O 6 O 1 O 3 O 4 O 8arrow_forwardAssume the vitamin industry is perfectly competitive. When a new medical study shows that taking vitamins does not effect the quality and length of life as much as previously believed, demand for vitamins decreases. What would happen to vitamin producers’ profits in the short run and the long run? Profits will [increase, decrease, stay the same] in SR. In LR, some ["existing, new] firms will [enter, exit] , driving [up, down] the price until profits are [positive, negative, back to zero] .arrow_forwardQ40 and Q41arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education