A perfectly competitive, profit maximizing firm earns zero economic profit in the long run. The firm's total cost is: TC = a+ bQ?. Use only the cost curve given. a. Determine mathematically the level of output the firm will produce in the long run.
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- For the pizza seller whose marginal, average variable, and average total cost curves are shown below. a. What is the profit maximizing level of output and profit of this firm if the price of pizza is $3.50? b. Below what price will this firm shut-down in the short-run? c. If the price was $4.50, what would this firm's profit be?Does a competitive firm’s price equal the minimumof its average total cost in the short run, in the longrun, or both? Explain.Explain the fact that the short-run supply curve for a price taking firm is that segment of its marginal cost (MC) curvethat lies above the average variable cost curve?
- Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's economic and accounting profits in the short run ? A. Economic profits are minus $10 and accounting profits are $20 B.Economic profits are $20 and accounting profits are minus $10 C. None Which one?Q4) A perfectly competitive firm has the following total cost function: Total output Total Cost 0 20 1 30 2 42 3 55 4 69 5 84 6 100 7 117 How much will the firm produce if the price of the production the market is Rs. 14 per unit? How will it change its output if price rises to Rs. 16 per unit?Explain the average-marginal rule in cost curves? (f) What is the market price? (Assume the firm is operating in a pure competitive market.) (g) If the firm enjoys market power than the firm’s market price will be higher or lower than the competitive market price? Why?
- Q4) A perfectly competitive firm has the following total cost function: Total output Total Cost 0 20 1 30 2 42 3 55 4 69 5 84 6 100 7 117 How much will the firm produce if the price of the product on the market is Rs. 14 per unit? How will it change its output if the price rises to Rs.16 per unit?A firm in a perfectly competitive market has a short-run total cost function equal to SRTC=4+20q, where q is the number of units the firm produces. The firm faces a market price of $10. Enter the optimal number of units should this firm produce to profit maximize? Hint: this could be considered a "trick question", but it's easy once you think about the way a firm should profit maximize.Using the Diagram above, answer the following questions: (c) Suppose the market price of the good in the short-run is $9 per unit. What do you know about this firm’s short-run profits, TR, TC, FC, VC, and level of production given this information? What do you predict will happen in the long-run in this market? (Hint: describe verbally, with numerical reference points, what you know about these different measures.)
- The attached figure shows the short-run cost curves for a perfectly competitive firm. If the price of the product were $8, and the firm does not close, the firm's short-run output will be:a. 0 (zero)b. between 0 (zero) and 10c. 10 or mored. Cannot be determined unless more information is available.Please elaborate on your answer to each alternative, whether it is true, false or uncertain.Consider a firm that is currently producing a level of output that maximizes its profits. The firm generates revenue of $40 million per month. Each month, the firm spends $30 million on worker compensation and $20 million on renting buildings and machinery. a) What is this firm’s current monthly profit? b) Should this firm continue to operate in the short run? Why?