Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 15, Problem 2SPPA
To determine
The firm does not choose the price at which it sells the commodity and in
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Firms in a perfectly competitive market are said to be “price takers”—that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
Firms in a perfectly competitive market are said to be "price takers" - that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfect competitive market, but you are not happy with its price, would you raise the price, even by a cent?
Will 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.
Chapter 15 Solutions
Foundations of Economics (8th Edition)
Ch. 15 - Prob. 1SPPACh. 15 - Prob. 2SPPACh. 15 - Prob. 3SPPACh. 15 - Prob. 4SPPACh. 15 - Prob. 5SPPACh. 15 - Prob. 6SPPACh. 15 - Prob. 7SPPACh. 15 - Prob. 8SPPACh. 15 - Prob. 9SPPACh. 15 - Prob. 10SPPA
Ch. 15 - Prob. 11SPPACh. 15 - Prob. 1IAPACh. 15 - Prob. 2IAPACh. 15 - Prob. 3IAPACh. 15 - Prob. 4IAPACh. 15 - Prob. 5IAPACh. 15 - Prob. 6IAPACh. 15 - Prob. 7IAPACh. 15 - Prob. 8IAPACh. 15 - Prob. 9IAPACh. 15 - Prob. 10IAPACh. 15 - Prob. 11IAPACh. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQ
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- If new technology in a perfectly competitive market brings about a substantial reduction in costs of production,how will this affect the market?arrow_forwardWhat is the equilibrium or profit-maximizing quantity of production for a perfectly competitive firm?arrow_forwardThe following graph shows the daily cost curves of a firm operating in a perfectly competitive market. Suppose the market price for the good is $80 per unit. Use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss at the market price of $80 per unit if the firm chooses to produce the profit-maximizing quantity of output. PRICE AND COST (Dollars) 100 90 80 70 60 50 30 20 10 0 0 MC 5 ATC AVC 10 15 20 25 35 QUANTITY (Thousands of units) 30 At the market price of $80 per unit, this firm will 40 45 50 Profit or Loss and will in the short run.arrow_forward
- A perfectly competitive market is in a long-run equilibrium. Prices of variable inputs for the typical firm decrease. Describe what will happen in the short run, to the typical firm’s marginal costs, average fixed costs, average costs, profits, and production as the firm makes its choices. In each case, describe why those changes take place. Describe exactly why the firm decides to make changes. As part of that discussion, summarize what happens in the market and how those changes relate to the typical firm. You do not need to discuss why the changes take place in the market. Outline in several sentences what will happen in the long run to the typical firm and the market.arrow_forwardList the requirements for a perfectly competitive goods market.arrow_forwardConsider a perfectly competitive market characterized by a market supply equal to QS=32*P and a market demand equal to QD=400-8*P. What is the market equilibrium quantity?arrow_forward
- A single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How “small” is “small”?arrow_forwardAccording to marginal analysis, a perfectly competitive firm will produce an output level where what is true about its Marginal Revenue and its Marginal Cost?arrow_forwardConsider the perfectly competitive market for tofu. Many people use tofu as a substitute for meat. Starting from long-run equilibrium, show graphically what happens in the short and long run to q. Q, P, and in the market for tofu (in comparison to the starting point) if the price of meat is increasing.arrow_forward
- Suppose the market for beans is perfectly competitive. The average total cost and marginal cost of growing beans in the long run for an individual farmer are illustrated in the graph to the right. According to the graph, the long run equilibrium price for beans is $ per box. (Enter a numeric response using a real number rounded to two decimal places.) C Price and cost (dollars per box) 10- 9- 00 N 1 0 10 MC 20 30 40 50 60 70 80 Quantity of beans (boxes per week) ATC 90 100 Narrow_forwardIn the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?arrow_forwardneed helparrow_forward
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