Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
13th Edition
ISBN: 9781337742535
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 6WNG
(a)
To determine
Graphical illustration of a
(b)
To determine
Graphical illustration of a perfectly competitive firm that incurs losses but that will continue operating in the short run.
(c)
To determine
Graphical illustration of a perfectly competitive firm that incurs losses but that will shut down in the short run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Homework 4B
Draw the MR, MC, AVC, ATC, Demand, supply, MC and MR for the
following situations. For each show (as done in class). For each of these
situations show the total revenue, total cost area, and shade the profit or loss
area, and if the situation is a shut down state why it should shutdown.
a. A perfectly competitive firm showing a profit
b. A perfectly competitive firm showing a loss but not a shut-down
c. A perfectly competitive firm at a break-even point
d. A monopolist showing a profit
e. A monopolist showing a loss but not a shut-down
f. A monopolist at a break-even point
g. Difference between a monopolist and a perfectly competitive firm for
a profit situation on the same graph space.
These diagrams, pertain to a perfectly competitive firm producing output q and the
industry in which it operates. In the long run we should expect:
MC
ATC
AVC
MR P
Ono change in the number of firms in this industry.
firms to leave the industry, market supply to fall, and product price to rise.
firms to leave the industry, market supply to rise, and product price to fall.
firms to enter the industry, market supply to rise, and product price to fall.
Refer to the figure above for the perfectly competitive firm. If the market price is $300, the firm will have:
a. normal profit
b. economic profits
c. economic losses but will continue to operate in the short run d. economic losses and will shut down in the short run
e. none of the above
Chapter 9 Solutions
Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.1 - Prob. 4STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.2 - Prob. 4STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2ST
Ch. 9.3 - Prob. 3STCh. 9.3 - Prob. 4STCh. 9.4 - Prob. 1STCh. 9.4 - Prob. 2STCh. 9 - Prob. 1QPCh. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Many plumbers charge the same price for coming to...Ch. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - According to the accompanying table, what quantity...Ch. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNGCh. 9 - Prob. 8WNGCh. 9 - Prob. 9WNGCh. 9 - Prob. 10WNG
Knowledge Booster
Similar questions
- Use a graph to demonstrate the scenario where a competitive firm would be earning positive profit in the short run. Can this scenario be maintained in the long run? Why? What are the ‘shutdown point’ and ‘break even point’ of a competitive firm . Explain with diagram. A competitive market starts in a situation of long run equilibrium. Then there is an increase in demand. Explain what happens in the short run and long run, using necessary diagrams.arrow_forwardFind the graphs for a perfectly competitive firm. Graphs must include the following specific graphs: Find the graph for short run economic loss for the firm. Find the graph for short run economic profit for the firm. Find the graph for long run – normal profit for the firm. Make sure the graphs show the area of economic profit or loss.arrow_forwardPerfect Competition You are a consultant on profit maximization. What do you recommend in each of the cases below for a perfectly competitive firm? In the "Answer" box, the following options can be used more than once or not at all: 1.The firm is in the correct position. 2 The firm should increase price. 3. The firm should decrease price. 4. The firm should increase output 5.The firm should decrease output. 6. The firm should shutdown. Note: You do not need to fill in all the blanks to find the answer for each case but you must show your calculations (i.e, blanks filled per case) used to determine your answer. Case E $1.00 $4.00 1,000 10,000 2,000 TR $10,000 $5.000 $8,000 TC $9,000 $8,000 TFC $1,500 $1,000 TVC $7,000 ATC $1.80 $3.50 At minimum level $4.50 AVC $5.50 $3.00 MC $2.00 $5.00 $4.50 $4.00 Answer:arrow_forward
- C. Table below shows some cost data for a perfectly competitive firm i. Is the firm operating in the short run or long run? How do you know?ii. At a market price of $32, what would be the output of the firm? Does this firm makeeconomic profit or loss at this price level? iii. If the market price is $32, would the firm shut down or keep operating? Why? iv. Based on your answer above, would firms enter or exit the market in the long run? What will happen to the market price?arrow_forwardOn x and y axes, draw ATC, AVC, and MC curves and MR curve of a perfectly competitive firm that is making a a) profit b) loss c) breaks even Note: Draw a separate diagram for each.arrow_forwardGraph the following for a perfectly competitive firm: A graph for short run economic profit for the firmarrow_forward
- Question 2 Use the following graph: Costs and Revenue $14 00 $12 $11.50 $10 0 100 What will firms do in the long-run in this competitive market? Enter Exit Start-Up Shut-Down 150 200 MC AVC ATC P=MR=AR Quantityarrow_forwardGraph the demand curve for a pure competitive firm, label the graph. What is the relationship between marginal revenue (MR) and the demand curve (is MR greater, equal, or less than the demand curve)?arrow_forwardSuppose a perfectly competitive industry with constant costs is initially in long-run equilibrium. Demand for the product produced in this industry increases due to a change in tastes and preferences. In the LONG run this will result in A. the product selling for a higher price, each firm producing more of the good, and positive economic profits for the firms in the industry. B. the product selling for a higher price; each firm in the industry producing the same level of the good as they did initially, since their capital is fixed; and each firm earning positive economic profit. C. the product selling for a higher price and firms making higher profits initially, but the industry will attract new firms, which will cause the price to fall back to its original level and economic profits to fall back to zero. D. the price staying constant, since the firms in this industry are price takers, and the output of each firm increasing; therefore each firm will earn positive economic profit.arrow_forward
- The packaged milk market in Pakistan is perfectly competitive. (1) Some firms in the market are making profit, others are having losses. Draw and explain graphs showing MC, ATC, MR, AR, price and quantity of output to illustrate these situations. (2) In the short run some of these firms may decide to shut down temporarily. In the long run some of these firms may exit the market, and new firms may enter. Draw and explain graphs to show these situations and short run and long run supply curves. (3) If firms can enter and exit the packaged milk market in the long run but not in the short run, show how a decrease in demand due to lower incomes of Pakistani consumers during COVID Pandemic affects price and profitability.arrow_forwardDiscuss the long-term effects in a perfectly competitive market if an existing firm is making profits or losses. Use graphs to explain your explanations.arrow_forwardO Macmillan Learning Perfect Competition: Around the World Consider the accompanying graph illustrating the marginal cost (MC), average total cost (ATC), and demand (D) curves for an individual coffee farmer in Colombia. Determine what profits, if any, the farmer is earning. Then graphically illustrate the long-run equilibrium for the farmer. a. In the short run, the farmer is earning b. Now assume the Colombian farmer continues to operate in the long run. Move the appropriate curve or curves on the graph to illustrate the long-run equilibrium for the farmer. c. In the long run, the farmer is earning a normal profit an economic loss an economic profit Price Firm Firm's output MC ATC D = Pricearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning