Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 16, Problem 5CQ
To determine
Describe whether competition is important for the efficient use of resources.
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How do firms or business in a competitive market decide what prices are and how does the economy look like? What if they are all selling the same product?
Microeconomics
The table below represents a firm's profit for producing and selling candles. Assume that if a firm would have the same profit at two different levels of output, then the firm would choose the greater level of output. Assume that the only levels of output that the firm can produce are the levels of output given in the table. At what level of output does the firm maximize profits?
Quantity
Total Cost
Marginal Cost
Total Revenue
Marginal Revenue
0
$20
-
$0
-
15
$60
$2.67
$75
$5
30
$110
$3.33
$150
$5
45
$170
$4.00
$225
$5
60
$245
$5.00
$300
$5
75
$340
$6.33
$375
$5
If a technological advance lowers a firm's production costs, why do prices typically fall?Shouldn't the firm maintain the same price and earn economic profit?
Chapter 16 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- How would you discuss competitive advantage and how a company estimates their own competitive advantage?arrow_forwardHow do markets operate to bring product into existence? How does that relationship affect supply and demand for the various markets involved? In what ways has the change in supply and demand affected the market? What enabled the many participants in the production of this product to cooperate, and how has this affected the production of the product?arrow_forwardWhen economic profits are zero in equilibrium, the firm's revenue must be sufficient to cover all opportunity costs. Is this correct or not? Why?arrow_forward
- Explain different types of competition and also state why is competition good for the consumer from an economics perspectivearrow_forwardPlease no written by hand and no image According to the Washington Post article The Downsides of Cheap Corn, farmers' 2014 crop revenues were down from prior years, despite very productive harvests all around the United States. Which of the statements is the explanation offered by the article for this apparent paradox? The costs of farming have increased faster than productivity, leading to higher crop yields but lower profits. An influx of farmers entering the agricultural market has led to fierce competition, driving down revenues. The increase in the supply of crops has decreased prices by a greater percentage than the percentage increase in quantity of sales. Consumer demand for agricultural crops such as corn, soybean, and wheat are at record lowsarrow_forwardWhy does a modern capitalist economic system require the existence of markets?arrow_forward
- Three managers of the Magic Potion Company are discussing a possible increase in production. Each suggests a way to make this decision. HARRY: We should examine whether our company’s productivity—gallons of potion per worker—would rise or fall. RON: We should examine whether our average cost—cost per worker—would rise or fall. HERMIONE: We should examine whether the extra revenue from selling the additional potion would be greater or smaller than the extra costs. Who do you think is right? Why?arrow_forwardExplain what it means in terms of opportunity cost when Economic profits are zero?arrow_forwardThe table represents the demand (quantity at each price) for and the total cost to produce a firms product. Complete the last three columns of the table above. a. Based upon the data in your table, how many products will the firm produce and at what price will it sell it product to maximize profit? Will the firm make an economic profit? If so, how much? b. In what type of market structure does this firm participate? How did you decide this?arrow_forward
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