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
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 22, Problem 7CQ
To determine
Shut down point of a perfect competitive firm.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In the long run, when there are economic losses, firms leave the industry, which will decrease the market supply and increase the price until economic losses are zero. True False
In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?
Many economists would argue that there is no such thing as perfect competition in the real world. What limitations to that theory would support their argument?
Chapter 22 Solutions
Economics: Private and Public Choice (MindTap Course List)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Why do economists believe that economic profit is the more accurate measure of a business success? Why is economic profit the superior method of determining a business success?arrow_forwardDo you think firms really try to maximize profits? Do firms (especially small ones) know what prices they have to charge to maximize profits?arrow_forwardThe data in the following table give information about the price P (in dollars) for which a perfectly competitive firm can sell a unit of output and the total cost of production, where quantity is q, total cost is C, marginal cost is MC, total revenue is TR, marginal revenue is MR, and profit is . Fill in the blanks in the following table. (Enter your responses using integers.) q 0 1 Further, profit will 2 3 4 5 6 7 8 9 10 11 C 100 150 178 198 212 230 250 272 310 355 410 475 MC TR Show what happens to the firm's output choice and profit if the price of the product falls from $50 to $40. If the market price falls from $50 to $40, then the firm's output will from $ to $ from P = 50 MR (Enter your responses using integers.) units to π TR P = 40 MR units. (Enter your responses using integers.) πarrow_forward
- The optimal level of production for any company is the level of production that either maximizes profits or minimizes losses. How does one determine the optimal level of production for any business? Explain. Explain why a company would shut down in the short run. Explain how a company could choose to get bigger, yet lower their average costs? What are the major characteristics of a firm competing under conditions of perfect competition? What are the major characteristics of a firm competing under conditions of monopoly? How does a demand curve differ in perfect competition from a demand curve in a monopoly? Name an example of a local monopoly?arrow_forwardThe figure below represents the short-run curves for TK Ltd, a popular Chinese cuisine restaurant. Answer the questions below. What market structure do you think TK Ltd is in? Explain using the characteristics of the market structure. What price does TK Ltd charge and what quantity does the firm produce to maximize profit or loss? Calculate this firm’s profit or loss. If this is a typical firm in the market, what do you think will happen to market supply and profit for this industry in the long run? Briefly explainarrow_forwardSuppose the market for apples is perfectly competitive. The short-run average total cost and marginal cost of growing apples for an individual grower are illustrated in the figure to the right. 40- 36- Assume that the market price for apples is $26.00 per box. What is the 32- MC profit-maximizing quantity for apple growers to produce? 75 boxes. 28- (Enter your response as an integer.) 24- At this level of output, profit will be $ 1950. (Enter your response rounded to the nearest dollar.) 20- ATC 16- 12- 8- 4- 10 20 30 40 50 60 70 80 90 100 Output (boxes of apples per day) Price (dollars per box)arrow_forward
- We’ve observed that there are few examples of perfectly competitive markets in the real world, yet we use the model of perfect competition as a comparison with other market structures. Can you think of any examples of monopoly in the real world?Describe something you believe could possibly called a monopoly and explain why it fits the characteristics of a monopoly. Is your example a true, unregulated monopoly? (For example, Microsoft has been called a monopoly, but it is not the sole producer of computer operating systems, so strictly speaking it’s not a monopoly.) If there are few true monopolies, what can we learn from studying that market structure?arrow_forwardYou read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The equilibrium output in agricultural markets based on what happens to the price given the change in supply, what do you think will happen to the equilibrium quantity? Will it remain the same, increase or decrease?arrow_forwardStrictly speaking, pure competition is relatively rare. Then why study it?arrow_forward
- Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. Suppose Hi-Tech's patent prevents other firms from using the new technology. Which of the following statements are true about what happens in the short run? Check all that apply. Hi-Tech's marginal-cost curve remains the same. Hi-Tech's profits increase. The price of books remains the same. Hi-Tech's average-total-cost curve shifts downward.arrow_forwardFirms always lose money in a long-run industry equilibrium, true or false?arrow_forwardThe number of firms in an industry is not always a good indicator of the extent to which that industry is competitive.” Do you agree with this statement?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
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
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc