Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Chapter 11, Problem 2RQ
To determine
Average Total Cost .
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Consider the following graph of the average and marginal cost functions for a firm in a perfectly competitive market.
At a price of P=10:
(iii) the marginal cost of production is .
(iv) the firm's total profit is .
(v) the firm's variable profit is .
Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: LO10.3 a. A horizontal line at 2 cents per paper clip. b. A vertical line at 2 cents per paper clip. c. The same as the market demand curve for paper clips. d. Always higher than the firm’s MC curve.
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Chapter 11 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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- In the table below, the firm; Output Total Revenue Total Cost $0 $30 $60 $90 $120 $150 $180 $25 $49 $69 $91 $117 $147 $180 O a. cannot be in a perfectly competitive industry, because its short-run economic profits are greater than zero. O b. must be in a perfectly competitive industry, because its marginal cost curve eventually rises. O c. cannot be in a perfectly competitive industry, because its long-run economic profits are greater than zero O d. must be in a perfectly competitive industry, because its marginal revenue is constant. 123 456arrow_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_forward19arrow_forward
- Refer to this table to answer the next three questions. The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Quantity 0 1 2 3 4 Profits are maximized when the firm produces O O O 2 0 1 04 O 3 Total Revenue $0 $6 $12 $18 $24 unit(s). Total Cost $6 $8 $12 $17 $24arrow_forwardAnswer question 2arrow_forwardSuppose the market price for a price taking firm is known to be $2, the total revenue accruing to it if it sells 100 is and the total revenue accruing to it if it sells 200 is O $100, $200 O $200. $400 $200, $400 O 52. S2arrow_forward
- 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.arrow_forward7. Long-run cost relationships The following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); for example, Q₁ marks the point of tangency between SRATC₁ and LRAC. The orange point on SRATC3 indicates the firm's current output level in the short run (Q3). COST PER UNIT SRATC₁ LRAC SRATC2 | " Q₂2₂ SRATC3 O " | 1 1 Q3 QUANTITY OF OUTPUT Q₁ SRATC5 SRATC4 1arrow_forwardSuppose your firm operates in a perfectly competitive market and has a U-shaped average variable cost (AVC) curve. Currently, you produce at where the product price (MR) equals average variable cost (on the upward sloping portion of the AVC curve), then your output will: O a. generate zero economic profits. O b. equal the profit-maximizing level of output. O c. exceed the profit-maximizing level of output. O d. be smaller than the profit-maximizing level of output.arrow_forward
- 34. How do i solve this questionarrow_forwardA marginal cost curve intersects average total cost at $6. This curve also intersects average total cost at $9. a. It is most accurate to say this firm will generate a loss at any price below $6 below $9 above $9 above $6 c. Which of the choices best explains why this price will cause the firm to shut down instead of continuing to operate at a loss? O O O O O total revenue > total variable costs total revenue > total fixed costs total revenue total fixed costs b. At what price level will this firm shut down immediately, with certainty? Any price below $9 Any price above $9 Any price below $6 Any price above $6arrow_forwardWhich of the following statements in the full competitive market is correct? Choose an answer 1. The companies maximize their profit according to the rule «price equals average total costs». O 2. The companies maximize their profit according to the rule "marginal costs equal average total costs". 3. In the short term, the companies always make a profit. O 4. In the short-term market result, it always applies that the market price is above the average total costs. 5. In the long-term market result, the market price corresponds to the average total costs.arrow_forward
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