Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 9, Problem 9CQ
To determine
The effects of competition among firms that leads to shut down condition.
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Microeconomics: Private and Public Choice (MindTap Course List)
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- Do you think firms really try to maximize profits? Do firms (especially small ones) know what prices they have to charge to maximize profits?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardWill a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.arrow_forward
- What are the advantages of scale in capitalist competition?arrow_forwardWhat are the advantages of pure competition?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
- If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explainarrow_forwardWhat price does a firm charge for the good it produces?arrow_forwardIn 2003, a single case in Alberta of bovine spongiform encephalopathy, also known as mad cow disease, temporarily shut down export markets for Canadian beef. a. Using firm and industry diagrams, show the short-run effect of declining demand for Canadian beef due to the shutdown of its export markets. Label the diagram carefully and write out in words all of the changes that you can identify. b. Although export markets eventually began to open up later that same year, the demand for Canadian beef remained low. On a new diagram, show the long-run effect of the declining demand. Explain in words.arrow_forward
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