EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 6QCMC
To determine
The policy affects the consumption in the short run and in the long run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
explain your answers in detail and use graphs
whenever appropriate:
The market for rental cars is very competitive.
How would the following developments affect
the quantity of car rentals that a typical rental
car company wants to supply in the short run?
a. With the easing of fears about Covid 19,
people are more excited to travel than before.
b. Local governments reduce the yearly fee
that rental car companies have to pay for their
facilities. Note, these fees do not vary with how
many cars the company rents.
c. Rental car companies have to pay higher
wages for their workers.
Suppose that initially the market for rental cars
is in long-run equilibrium.
a. What does the fall in the yearly fee rental
car companies have to pay for their facilities
do to the profits of a typical rental car
company in the short run?
b. What will happen to the equilibrium price
and quantity of rental cars in the long run?
Why? What will happen to the profits of a
typical rental car company in the long run?
Assume that the market for pasta is in long-run equilibrium and that the pasta industry is a constant-cost industry. Explain with a graph and words what will happen to the price and quantity in the market when the demand for pasta decreases.
Edward Scahill produces table lamps in the perfectly competitive desk lamp market. The equilibrium price of lamps is $50.
a. Fill in the blanks in the table for total revenue and marginal revenue, as represented by (i and ii). (Enter your responses
as integers.)
(1) Total revenue is $.
(ii) Marginal revenue is $.
b. How many table lamps will Edward produce to maximize profit? lamps.
c. If next week the equilibrium price of desk lamps drops to $30, should Edward shut down?
O A. Yes because he is not covering his fixed costs.
OB. Yes because price is less than ATC.
OC. No because price is greater than minimum AVC.
D. No because he is covering his fixed costs and some of his AVC.
Output per Total Costs Marginal
week
Cost
0
1
2
3
4
5
6
7
8
9
$120
150
170
185
195
215
260
310
385
495
$30
20
15
10
20
45
50
75
110
Total Marginal
Revenue Revenue
SO
50
100
(1)
200
250
300
350
400
450
$50
50
50
(if)
50
50
50
50
50
Chapter 13 Solutions
EBK ESSENTIALS OF ECONOMICS
Ch. 13.1 - Prob. 1QQCh. 13.2 - How does a competitive firm determine its...Ch. 13.3 - Prob. 3QQCh. 13 - Prob. 1QRCh. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QR
Ch. 13 - Prob. 8QRCh. 13 - Prob. 1QCMCCh. 13 - Prob. 2QCMCCh. 13 - Prob. 3QCMCCh. 13 - Prob. 4QCMCCh. 13 - Prob. 5QCMCCh. 13 - Prob. 6QCMCCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - Prob. 6PACh. 13 - A firm in a competitive market receives 500 in...Ch. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PACh. 13 - Prob. 12PA
Knowledge Booster
Similar questions
- Suppose a corn dog stand market is perfectly competitive and in long-run equilibrium. One day, the city starts imposing a $300 per year tax on each stand. How does this policy impact the number of corn dogs produced and sold in the market in the short run and long run? Down in the short run and no change in the long run No change in the short run and down in the long run Up in the short run and no change in the long run No change in the short run and up in the long runarrow_forwardPretzel stands in New York City are a perfectly competitive industry in long-runequilibrium. One day, the city starts imposing a $100 per month tax on each stand.How does this policy affect the number of pretzels consumed in the short run and thelong run?a. down in the short run, no change in the long runb. up in the short run, no change in the long runc. no change in the short run, down in the long rund. no change in the short run, up in the long runarrow_forwardAssume that apples are produced in a perfectly competitive market. Columbia’s Orchard is a typical firm that grows and sells apples. Currently, Columbia earns zero economic profit, and the market price of apples is $10 per basket. b. Suppose an increase in the popularity of apple, the demand for apple increases. How will the increase in the demand for apples affect Columbia’s economic profit in the short run? Explain. Answer: c. What will happen to Columbia’s economic profit in the long run? Explain.arrow_forward
- According to the graph below, if the price of the good is $17, then the result for the perfectly competitive firm will be: Graph: Short-run profit and loss Price MC ATC AVC 1S 13 Quantity Select one: a. making a long-run loss and so it will shut down. b. making a short-run loss but it will continue to produce. c. making a long-run profit. d. making a normal profit.arrow_forwardWrite True or False and explain briefly 1- Consider a firm in a perfectly competitive market.There are situations where it is optimal for the firm to continue operating in the short-run , but shut down in the long-run. 2- Consider a firm in a perfectly competitive market.There are situations where it is optimal for the firm to shut-down in the short-run , but continue to operate in the long-run.arrow_forwardThe figure below depicts the market supply and demand for the perfectly competitive rollerblade industry. S Price per pair of Rollerblades 1,140 070 50 150 Number of pairs of Rollerblades per week Based on the figure above, if the current quantity demanded of rollerblades is 150 per week, you accurately predict that in the short run, Q Select one: a. price and quantity supplied will increase and quantity demanded will decrease. b. price and quantity supplied will decrease and quantity demanded will increase. c. price, quantity supplied and quantity demanded will increase. d. price, quantity supplied and quantity demanded will decrease.arrow_forward
- Assume that the tofu industry is perfectly competitive and in the long run equilibrium. There is a technical innovation that is invented and pioneered by one tofu factory which results in a significant cost reduction in the production of tofu. Explain the effects of this innovation on the price of tofu and the profit of this tofu factory and the profit of the entire tofu industry in the short run. What will happen to the price of tofu, the profit of this tofu factory and the profit of entire tofu industry in the long run?arrow_forward#10. The market for watches is perfectly competitive and is currently in equilibrium. What will happen if watches become more popular among college students? a. In the short run, firms will experience economic profits, but in the long run, firms will leave the market, bringing economic profits back down to zero. b. In the short run, firms will experience economic profits, but in the long run, firms will enter the market, bringing economic profits back down to zero. c. In the short run, firms will incur economic losses, but in the long run, firms will leave the market, bringing economic profits back down to zero. d. In the short run, firms will incur economic losses, but in the long run, firms will enter the market, bringing economic profits back down to zero. e. In both the short run and the long run, firms will experience zero economic profits.arrow_forwardThe figures below show (on the left) two possible demand curves and (on the right) two possible supply curves in the perfectly competitive hamburger market. Price per hamburger 0 A B D₂ D₁ Hamburgers per month Price per hamburger 0 Select one: a. Movement along D₁ from Point A to Point B. b. Demand shifts from D₁ to D₂. F c. Movement along S₁ from Point F to Point G. d. Demand shifts from D₂ to D₁. G Hamburgers per month Assume that people consume either hamburgers or hot dogs. What will be the result of a decrease in the price of hot dogs? Hint: Are hamburgers and hotdogs complements or substitutes? S₂ S₁arrow_forward
- . In Taiwan, there is only one beer producer, called Taiwan Beer. The Taiwanese government has passed a law prohibiting any other company from producing and selling beer in Taiwan. Suppose that the demand for beer in Taiwan increases. Explain what happens in the market for beer in Taiwan in the short run. Specifically, explain what happens to the price of beer, the number of beer producers, and the profits of beer producers. Explain what happens in the market for beer in Taiwan in the long run. Specifically, explain what happens to the price of beer, the number of beer producers, and the profits of beer producers. Explain who benefits and who is hurt by the government regulation granting Taiwan Beer a monopoly.arrow_forwardA Wall Street journal headline states: "a nation of snackers snubs old favorite: the beloved cookie" as u.s. consumers adopted more carbohydrate-conscious diets, the number of cookie boxes sold declined 5.4 percent that year, the third consecutive year of decline. a. Assuming the cookie industry is perfectly competitive demonstrate using market supply and demand curves the effect of this decline in demand on equilibrium price and quantity in the short run. b. Assuming a cookie form was in equilibrium before the change in demand, and it is a constant-cost industry, demonstrate the effect of the decline in equilibrium price for an individual cookie firm in the short run. c. How might your answer to question "a" if you are considering long run?arrow_forward3 The graph below shows the costs and revenue curves for Dollar-Daze, a typical profit-maximizing firm in a perfectly competitive market producing Good X. Answer the following questions based on the graph below d. As the market for Good X moves into the long-run equilibrium, explain what will happen to the price of Good X and why.e. Assume the cross-price elasticity of demand between Good X and Good B is positive, what will happen to the quantity demanded of Good B given the change in the long-run price of Good X in part (d)?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning