EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Chapter 8, Problem 2TY
To determine
Impact of increased productivity on profit.
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Suppose that a firm’s management would be pleased to increase its share of the market but if it expands its production, the price of its product will fall. Will its profits necessarily fall? Why or why not?
Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run?
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 8 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- If a firm chooses to produce output in the short run, how much output will it produce. Explain why the firm will choose that quantity. Which quantity of output is best for the overall society? Explain why that quantity is so good for society. Will the ideal quantity of output for the firm be the same quantity as the ideal quantity for society? Explain.arrow_forwardSnapshot of question(s) is attached.arrow_forwardThe firm raises prices. Quantity demanded in the short-run is unaffected, but in the long-run unit sales is expected to decline. what is the effect of this in firm value?arrow_forward
- Q2. In Pakistan, there are several farmers in various situations, selling identical products to the market, and many buyers. At the market, it is easy to compare prices. Therefore, agricultural markets often get close to Perfect Competition Market; explain it numerically as well as graphically.arrow_forwardREAD THEN ANSWER THE QUESTION : THE QUESTION : What would happen to Starbucks’ profit if the prices of all three go down, holding other things fixed? In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to…arrow_forwardWhy 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_forward
- The increase in demand for soap operas also increases the salaries of actors and actresses. If the soap opera industry is in a perfectly competitive market, what is the supply curve? long term for horizontal or upward-sloping soap operas? Explain.arrow_forwardAll the supply of peppermint oil is produced from mint plants grown in one county by several competitive growers (the number of growers is not limited). The quality of land in the county varies greatly. Would you expect the long-run market supply curve to slope upward, downward, or remain constant? Why?arrow_forwardD: P=100-Q and S: MC=Q. What is the profit-maximizing price and quantity? Round to two decimal places as you work and for your final answer. Please show all steps.arrow_forward
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