Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 13, Problem 6QE
To determine
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At what output does a perfectly competitive firm maximize its profit?
when marginal cost equals average fixed cost
when average total cost equals average revenue
when total revenue equals total variable cost
when marginal cost equals marginal revenue
According to marginal analysis, a perfectly competitive firm will produce an output level where what is true about its Marginal Revenue and its Marginal Cost?
A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues:
TC = $830,000
VC = $525,000
TR = $428,000
Given that the firm produces the level of output at which MR=MC, calculate the amount of profit (loss) this firm earns.
is it Profit=TR-TC?
Chapter 13 Solutions
Microeconomics
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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- draw marginal cost, marginal revenue, and average total cost curves for a typical perfectly competitive firm in long-run equilibrium and indicate the profit maximizing level of output and total profit for that firm.arrow_forwardWhat is the formula for profit maximization by firm ? Why does this result in the marginal cost curve becoming the same as the supply curve for firms in perfect competition? what is the difference between the short run and long run ? Why does this difference matter in our discussion of firm behavior?arrow_forwardA perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues: TC = $830,000 VC = $525,000 TR = $428,000 At that optimal level of output, what profit (loss) does the firm earn?arrow_forward
- A perfectly competitive industry consists of 700 identical firms, each with a short-run supply curve given by Qs = –20 + 15P. What is the equation for the industry's short-run supply curve?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardIn 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)?arrow_forward
- must each perfectly competitive firm be in equilibrium if the industry is in the long-run equilibrium? why?arrow_forwardPlease help with this question If a competitive firm finds that its average variable cost is decreasing at its current profit maximizing quantity, should the firm increase or decrease output?arrow_forwardThe market for drones is perfectly competitive. Assume for simplicity that fractions of everything, including firms, is possible. We have identical firms, each with a Total Cost curve of TC=712+q^2 and Marginal Cost curve MC=2q. Market demand is Q=895-2P. What is the long-run equilibrium market price? Enter a number only, drop the $ sign.arrow_forward
- Canadian red wheat is a normal good, in a perfectly competitive market that is in long-run equilibrium. There occurs a boom in the economy—incomes rise. What effect does this have on short-run equilibrium? Explain concisely the step-by-step process by which the industry returns to long-run equilibrium. Your answer should include the effects on the individual firm's output and profit, as well as any industry-wide adjustments that take place. Show graphically the relationship between the firm and the industry.arrow_forwardA perfectly competitive firm will maximize its profit when marginal revenue is greater than marginal cost. True or False?arrow_forwardSolve: Assume this is a perfectly competitive market. Answer the following questions and explain your answers. Complete the table. Q TC FC VC AFC AVC ATC MC 0 $6.50 1 $9.50 2 $10.50 3 $11.50 4 $12.50 5 $13.50 67 $14.50 $18.00 8 $22.00 9 $26.50 10 $31.50 Assume that the market price is $3.50: What is the profit-maximizing level of output for this firm? What is the dollar amount of the profit, or loss? Canterarrow_forward
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