Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 14, Problem 6CQQ
To determine
The policy affects the consumption in the short run and in the long run.
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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.
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
A. keep producing in the short run but exit the market in the long run.
B. shut down in the short run but return to production in the long run
C. shut down in the short run and exit the market in the long run.
D. keep producing both in the short run and in the long run.
Chapter 14 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - How does a competitive firm determine its...Ch. 14.3 - Prob. 3QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQCh. 14 - Prob. 6CQQCh. 14 - Prob. 1QR
Ch. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Suppose that each firm in a competitive industry...
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