Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 13, Problem 5PA
Subpart (a):
To determine
The
Subpart (b):
To determine
The average total cost curve, marginal cost curve, marginal revenue curve and supply curve, profit, long run impact.
Subpart (c):
To determine
The average total cost curve, marginal cost curve, marginal revenue curve and supply curve, profit, long run impact.
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Use the figure below, which shows the situation facing Mike’s Bikes, to answer the questions below. The demand and costs of other mountain bike producers are similar to those of Mike’s Bikes.
What quantity does the firm produce and what is its price? Calculate the firm’s economic profit or economic loss.
What will happen to the number of firms producing mountain bikes in the long run?
How will the price of a mountain bike and the number of bikes produced by Mike’s Bikes change in the long run? How will the quantity of mountain bikes produced by all firms change in the long run?
Is there any way for Mike’s Bikes to avoid having excess capacity in the long run?
Is the market for mountain bikes efficient or inefficient in the long run? Explain your answer.
The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. a. What level of output should this firm produce in the short run? b. What price should this firm charge in the short run? c. What is the firm’s total cost at this level of output? d. What is the firm’s total variable cost at this level of output? e. What is the firm’s fixed cost at this level of output? f. What is the firm’s profit if it produces this level of output? g. What is the firm’s profit if it shuts down? h. In the long run, should this firm continue to operate or shut DOWN
In the market for running shoes, all the firms face a similar demand curve and have similar cost curves to those of Smart in question 3.
a. What happens to the number of firms producing running shoes in the long run?
Answer:
b. What happens to the price of running shoes in the long run?
Answer:
c. What happens to the quantity of running shoes produced by Smart in the long run?
Answer:
d. What happens to the quantity of running shoes in the entire market in the long run?
Answer:
e. Does Smart shoes have excess capacity in the long run?
Answer:
f. Why, if Smart firm shoes has excess capacity in the long run, doesn’t the firm decrease
its capacity?
Answer:
g. What is the relationship between Smart Shoes’ price and marginal cost?
Answer:
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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