MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
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Question
Chapter 13, Problem 2QAP
(a)
To determine
Labor discrimination in a
(b)
To determine
Check whether the exclusion of discrimination will increase the efficiency or not.
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If the price is P, the firm in a perfectly competitive market is making a profit when producing the profit maximizing quantity Q1. Why
would this situation lead to new entrants? Why would this increase in the number of firms competing in the market lead this firm to
reduce output to Q (depicted in the right panel)?
INDUSTRY
S
S¹
FIRM
Costs -
Revenue
MC
ATC
K
P
P
AR = MR
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p1
Q Q¹
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Consider a profit-maximizing cotton candy firm that operates in a perfectly competitive output and labor market. Suppose there is a decrease in the price of good X, and the cross-price elasticity of demand for cotton candy with respect to good X is positive. How does this impact:
a. the wage paid to cotton candy workers
b. the amount of labor hired by the cotton candy firm?
Explain and show using well-labelled graphs.
University Intermediate Microeconomics, Theory of Production
Chapter 13 Solutions
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
Ch. 13.1 - Prob. 1QCh. 13.1 - Prob. 2QCh. 13.1 - Prob. 3QCh. 13.1 - Prob. 4QCh. 13.1 - Prob. 5QCh. 13.1 - Prob. 6QCh. 13.1 - Prob. 7QCh. 13.1 - Prob. 8QCh. 13.1 - Prob. 9QCh. 13.1 - Prob. 10Q
Ch. 13 - Prob. 1QECh. 13 - Prob. 2QECh. 13 - Prob. 3QECh. 13 - Prob. 4QECh. 13 - Prob. 5QECh. 13 - Prob. 6QECh. 13 - Prob. 7QECh. 13 - Prob. 8QECh. 13 - Prob. 9QECh. 13 - Prob. 10QECh. 13 - Prob. 11QECh. 13 - Prob. 12QECh. 13 - Prob. 13QECh. 13 - Prob. 14QECh. 13 - Prob. 15QECh. 13 - Prob. 16QECh. 13 - Prob. 17QECh. 13 - Prob. 18QECh. 13 - Prob. 19QECh. 13 - Prob. 20QECh. 13 - Prob. 1QAPCh. 13 - Prob. 2QAPCh. 13 - Prob. 3QAPCh. 13 - Prob. 4QAPCh. 13 - Prob. 5QAPCh. 13 - Prob. 1IPCh. 13 - Prob. 2IPCh. 13 - Prob. 3IPCh. 13 - Prob. 4IPCh. 13 - Prob. 5IP
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- The number of firms in an industry is not always a good indicator of the extent to which that industry is competitive.” Do you agree with this statement?arrow_forwardb) How does perfeet competition lead to allocative and productive efficiency? (Explain using less than 100 words).arrow_forwardWe’ve observed that there are few examples of perfectly competitive markets in the real world, yet we use the model of perfect competition as a comparison with other market structures. Can you think of any examples of monopoly in the real world?Describe something you believe could possibly called a monopoly and explain why it fits the characteristics of a monopoly. Is your example a true, unregulated monopoly? (For example, Microsoft has been called a monopoly, but it is not the sole producer of computer operating systems, so strictly speaking it’s not a monopoly.) If there are few true monopolies, what can we learn from studying that market structure?arrow_forward
- Suppose a profit maximizing firm in a perfectly competitive market currently pays their employees $20 per hour. When their most recently hired employee began working at the firm, their hourly production increased by 5 units. What price must they sell their product for?arrow_forwardExplain how market competition affect the mark –up in price setting and the fraction of the marginal product that the firm retains as profitarrow_forwardurgently need 14. Consider the following setup for a perfectly competitive market: Suppose that for the firm, TC=625+Q^2 and MC=2Q, and for the industry, demand is given by P=100-Q and supply is given by S=Q. However, suppose now that there is an increase in demand, so that demand is given by and for the industry, demand is given by P=500-Q. Will this market outcome be sustainable? That is, do you expect firms to leave the market, enter the market, or neither? a. Firms will enter the market. b. Firms will leave the market. c. Firms will neither enter nor leave the market. d. There could be barriers to entry.arrow_forward
- Malaysia is the world's largest producer of rubber gloves. The Rubber gloves industry is perceived as a highly competitive industry. Explain in detail how rubber glove manufacturers are able to increase their production in the short-run and long run.arrow_forwardA firm in a perfectly competitive market uses only workers to produce output. The relationship between the number of workers and the amount of output is given in the table attached. Suppose the wage paid to a worker is $100, and the firm has fixed costs of $500. a. Complete the table by filling in marginal product (MP), variable cost (VC), total cost (TC), and marginal cost (MC). b.Suppose the price of the good they produce is $25. What quantity does this firm produce in the short run? What are its profits? Show your work and explain your answer. c. Is the market in long-run equilibrium? Explain. If it is not, explain what will happen to the price in the market and the quantity produced by each firm as the market transitions to long-run equilibrium.arrow_forwardSuppose all firms in a perfectly competitive market structure are in long-runequilibrium. Then demand for the firms’ product increases. Initially, price andeconomic profits rise. Soon afterward, the government decides to tax most (but not all) of the economic profits, arguing that the firms in the industry did not earn the profits. Rather, the profits were simply the result of an increase in demand. What effect, if any, will the tax have on market adjustment?arrow_forward
- Which of the following is an example of a perfectly competitive market structure? a) The market for smartphones b) The market for agricultural products c) The market for electricity in a regulated market d) The market for luxury carsarrow_forwardSuppose a firm has the following expenditures per day: $250 for wages and salaries, $50 for materials, $60 for equipment, and $40 for rent. The market wage for the manager is $120 per day but the owner-manager does not draw a salary. Assume the daily revenue is $420. What is the economic profit for the firm described above? Just give formula.arrow_forwardConsider a firm that operates in a market that competes aggressively in prices. Due to the high fixed cost of obtaining the technology associated with entering this market, only a limited number of other firms exist. Furthermore, over 70 percent of the products sold in this market are protected by patents for the next eight years. Does this industry conform to an economist’s definition of a perfectly competitive market?arrow_forward
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