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Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 13, Problem 5CQQ
To determine
The relationship between price, marginal cost, and
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Students have asked these similar questions
) In the long run equilibrium of a competitive market with identical firms, what is the relationship between price ( P ), marginal cost ( MC ), and average total cost ( ATC )? if
P > MC and P > ATC.
P > MC and P = ATC.
Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below.
a.What is the level of profit for this firm at the profit maximizing output?
b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find?
c. What do you predict will happen in this market over the long run?
In the long-run equilibrium of a competitive market with identical firms, what are the relationships among price (P), marginal cost (MC), and average total cost (ATC)?
Chapter 13 Solutions
Essentials of Economics (MindTap Course List)
Ch. 13.1 - Prob. 1QQCh. 13.2 - How does a competitive firm determine its...Ch. 13.3 - Prob. 3QQCh. 13 - Prob. 1CQQCh. 13 - Prob. 2CQQCh. 13 - Prob. 3CQQCh. 13 - Prob. 4CQQCh. 13 - Prob. 5CQQCh. 13 - Prob. 6CQQCh. 13 - Prob. 1QR
Ch. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - A firm in a competitive market receives 500 in...Ch. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Suppose that each firm in a competitive industry...
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- Firms in an industry have the following cost function: C(q)=3q3-6q2+4q. If the market is perfectly competitive, what do we expect the price to be in the long run? Select one: a. 2 b. 3 c. 1 d. 8arrow_forwardWill a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.arrow_forwardSuppose the wholesale market for corn is a perfectly competitive market, and all firms in the corn industry are profit-maximizing firms. Consider that the market is in short-run equilibrium. Which of the following statements are correct? Choose one or more: A. Total costs for each firm in the market may be different. B. All firms in the market must be earning identical profits. C. All firms selling corn must have the same marginal cost, regardless of each firm's cost structure. D. Firms that choose not to sell in this market must be earning exactly zero profit. E. All firms in the market must be making either positive profits, or exactly zero profit.arrow_forward
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