ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Question
Chapter 11, Problem 3DQ
To determine
Entry and exit of the pure competition.
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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.
Please no written by hand and no emage
The following figure shows the revenue and cost curves for a firm X.
RM
10
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b.
C.
7
6
LO
5
4
3.5
0
20 25 30
MC
40
AVC
AC
AR=MR
Units
If a firm X achieves productivity efficiency, what will be the total revenuel
generated
At what price will a firm stop operating? Please explain.
If the market price is RM4.00, what is the total profit or total loss.
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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 .arrow_forwardIn 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_forward34. How do i solve this questionarrow_forward
- Can someone please help me with this question?arrow_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_forwardRefer 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_forward
- The table below describes a firm that sells output in a perfectly competitive market. Note the second column describes total costs. O $8 O $12 O $6 Output O $4 0 1 2 3 4 5 Which of the following market prices would cause the firm's profit-maximizing output level to be equal to 5? 6 Total Cost (in dollars) $3 $9 $14 $18 $23 $30 $40 4arrow_forwardSuppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?arrow_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
- The figure shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces O A. 20 units of output and earns a normal profit. MC ATC 50 B. 10 units of output and incurs an economic loss. 40 O C. 10 units of output and earns a normal profit. O D. 20 units of output and incurs an economic loss. 30 MR 20 10 10 30 40 Quantity (per day) Price and costs (dollars) 20arrow_forwardCH $1.50 $1.25 $0.75 150 9 In the above figure, assume that So represents the industry supply curve and Do represents the demand curve in a perfectly competitive market. What can be said about the demand curve that an individual firm faces? O An individual firm will face a downward sloping demand curve starting at $1.25. O An individual firm will tace a horizontal demand curve at $1.25. O An individual firm will face a vertical demand curve at 250. O An individual firm will face the demand curve indicated by Do 4arrow_forwardThe table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market. Price $50 $50 $50 $50 $50 $56 When one unit is produced exceed O marginal costs, marginal revenue, more O marginal revenue; marginal costs more O marginal revenue, marginal costs; less Omarginal costs, marginal revenue, less and the fem should produce Quantity 0 1 2 3 4 15 TC $10.00 $20.00 $2750 $77 50 $147.50 $250 00arrow_forward
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