EBK MODERN PRINCIPLES OF MICROECONOMICS
4th Edition
ISBN: 8220106824351
Author: COWEN
Publisher: MAC HIGHER
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Chapter 4, Problem 13TPS
To determine
Equilibrium in the market.
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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry.
Price (dollars)
24
8
MC
ATC
MR
30
D
45 50
Quantity/time
The firm will maximize its profit at a quantity of
units.
After choosing the profit maximizing quantity, the firm will charge a price of
The firm will receive $
in revenue at the profit-maximizing quantity.
The total cost of production for this profit-maximizing quantity is S
The maximum profit the firm can earn in this situation is $
per unit for this output.
How will the situation change over time?
Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.
◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero.
The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity.
This market is already in long-run equilibrium, and will not…
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Chapter 4 Solutions
EBK MODERN PRINCIPLES OF MICROECONOMICS
Ch. 4 - Prob. 1FTCh. 4 - Prob. 2FTCh. 4 - Prob. 3FTCh. 4 - Prob. 4FTCh. 4 - Prob. 5FTCh. 4 - Prob. 6FTCh. 4 - Prob. 7FTCh. 4 - Prob. 8FTCh. 4 - Prob. 9FTCh. 4 - Prob. 10FT
Ch. 4 - Prob. 11FTCh. 4 - Prob. 12TPSCh. 4 - Prob. 13TPSCh. 4 - Prob. 14TPSCh. 4 - Prob. 15TPSCh. 4 - Prob. 16TPSCh. 4 - Prob. 17TPSCh. 4 - Prob. 18TPSCh. 4 - Prob. 19TPSCh. 4 - Prob. 20TPSCh. 4 - Prob. 21TPSCh. 4 - Prob. 22TPSCh. 4 - Prob. 23TPSCh. 4 - Prob. 24TPSCh. 4 - Prob. 25TPSCh. 4 - Prob. 26TPSCh. 4 - Prob. 27TPSCh. 4 - Prob. 28CCh. 4 - Prob. 29CCh. 4 - Prob. 30CCh. 4 - Prob. 31CCh. 4 - Prob. 32CCh. 4 - Prob. 33CCh. 4 - Prob. 34C
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