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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Question
Chapter 22, Problem 7CQ
To determine
Shut down point of a perfect competitive firm.
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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?
The 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.)
π
Chapter 22 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- The 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_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_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_forwardMicroeconomics: Why do firms enter an industry when they know that in the long run economic profit will be zero?arrow_forwardFirms always lose money in a long-run industry equilibrium, true or false?arrow_forward
- The 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_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 profit-maximizing quantity for apple growers to produce? 75 boxes. (Enter your response as an integer.) 32 MC 28 At this level of output, profit will be S 900. (Enter your response rounded to the nearest dollar.) Apple growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal 20- place.) ATO 12- 20 30 40 so 80 70 ao 90 100 Output (boxes of apples per day) (xoq jəd sejop) soarrow_forwardConsider two perfectly competitive industries, A and B, both operating in a state of long-run equilibrium and subject to constant returns to scale. Now let consumers' preferences change: more demand is directed to industry A and less to B. Give an explanation of what will happen (a) in the short run, and (b) in the long run. (Describe and explain the shifts that will occur in the relevant curves.) HTML Editor B IUA A I E E = E E X 三E D ¶ 1 12pt Paragraparrow_forward
- We expect that firms in perfectly competitive markets can earn higher economic profits in the short run but will only earn normal profit in the long run. Why do we expect perfectly competitive firms to be unable to earn high economic profit in the long run? The inability of perfectly competitive firms to earn high economic profit in the long run is dependent on there being low barriers to entry in perfectly competitive markets. Explain why this is the case. Why do firms remain in business if they cannot earn economic profit?arrow_forwardThe data in the following table give information about the price P (in dollars) for which a 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 R, marginal revenue is MR, and profit is T. Fill in the blanks in the following table. (Enter your responses using integers.) P= 60 P= 40 MC R MR R MR 100 |이 - 100 - 100 1 150 50 60 60 - 90 40 40 - 110 178 28 120 60 - 58 80 40 - 98 3 198 20 180 60 - 18 120 40 - 78 4 212 14 240 60 28 160 40 - 52 230 18 300 60 70 200 40 - 30 250 20 360 60 110 240 40 - 10 7 272 22 420 60 148 280 40 8 310 38 480 60 170 320 40 10 355 45 540 60 185 360 40 5 10 410 55 600 60 190 400 40 - 10 11 475 65 660 60 185 410 40 - 65 8 8 8 88888 88 8arrow_forwardUnder conditions of perfect or pure competition, or close to those conditions, producers (firms) are what are called “price takers”. This means that the price for the product that they are selling is determined by the market. No matter how little or how much product they supply, they can sell all they want at that price. If they were to price their product higher, they will sell zero. Which of the following is true? The price is equal to marginal revenue but not average revenue The price is equal to marginal revenue and average revenue The price is equal to average revenue but is not equal to marginal revenue The price is above both marginal revenue and average revenuearrow_forward
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