Answered: a profit-maximizing firm finds that, at…

a profit-maximizing firm finds that, at its current level of production, MR > MC, it will * a)decrease output. b)earn greater profits than if MR = MC. c)shut down.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section9.2: Perfect Competition In The Short Run

Problem 2ST

See similar textbooks

Related questions

Q: Profits are maximized at the output at which marginal cost equals marginal revenue. If the market…

A: Average variable cost is minimum where MC=AVC

Q: What is meant by selling cost? Name one market where selling cost is applicable

A: Selling cost The overall expense made by a monopolistically competitive corporation in trying to…

Q: The, competitive firm maximizes its profit by operating where:

A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…

Q: A profit-maximizing firm in the short run will expand output а. until total revenue equals total…

A: A profit-maximizing firm produces a level of output at which it is a le to get maximum Profit and…

Q: Imagine a firm in a competitive market comes up with a new production method, which halves its…

A: Perfect competition market is the market where large numbers of sellers and buyers are exchanging…

Q: If a competitive firm finds that it maximizes short-run profits by shutting down, which of the…

A: Shut down point: The shutdown point exits at that point where the price is equal to the minimum…

Q: explain why a firm might want to produce its good even after diminishing marginal returns have set…

A: The firm may wish to continue operating and manufacturing products even after decreasing marginal…

Q: You own a printing firm. Two of your senior managers provided you with advice. The first manager…

A: The profit of a firm is calculated by subtracting the total costs incurred on production from the…

Q: The data below shows tabulation on the production of a hypothetical product. Output (Q) Total cost…

A: Total fixed cost (TFC): TFC is the cost that a firm must occur even when the quantity of output is…

Q: In the ice cream industry, in the short run, what cost includes the cost of cream and sugar, but not…

A: The marginal cost- is the difference in overall production costs resulting from manufacturing or…

Q: shut down in the short run if Question 3 options: P < AVC TR < TC P = MC P < ATC TR=

A: In a competitive market there are large number of firms producing similar and identical products…

Q: To increase a company's profit, a manager suggests that the company needs to increase the value of…

A: Answer: Profit per unit is the difference between the price of the product and the average cost of…

Q: The theory of the firm mostly assumes that the goal of the firm is to maximize * sales.…

A: The firm theory has an impact on a number of decisions, including manufacturing processes, resource…

Q: In imperfectly competitive markets a ) some competition may exist but only in price and not in…

A: Imperfect markets are such markets that do not follow rules and regulations of perfect market such…

Q: Which of the following is not true for a competitive market? Group of answer choices Firms can earn…

A: Answer to the question is as follows:

Q: Long-Run Competitive Equilibrium it is included as a cost and are not included in economic profit.…

A: Perfect competition denotes the highest level of competition among all market structures. Under…

Q: Which of the costs discussed in the chapter is the most important when a firm is deciding how much…

A: The analysis of all costs is necessary for a firm. But analyzing marginal cost is most important.…

Q: if a perfectly competitive firm's output price is $10 and the firm is producing 500 units with a…

A: (Q) If a perfectly competitive firm's output price is $10 and the firm is producing 500 units with a…

Q: A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has…

A: Competitive firm: This firm has no control over a change of market supply or demand.

Q: Economic profit is... A-inclouded in the firm’s total opportunity cost . B-equal to normal profit…

A: Profit refers to the financial benefit realized by an individual or a firm when the revenue…

Q: The long run is characterized by: Multiple Choice at least one fixed input. the relevance of the law…

A: The long run is a period of time in which all factors of production and costs are variable. In the…

Q: A manager makes the statement that output should be expanded as long as average revenue exceeds…

A: Average revenue: Total revenue per unit of output = Price/OutputAverage cost: Total cost / output =…

Q: f the firm is producing at a quantity where marginal revenue exceeds marginal cost then, in order to…

A: The monetary value of production is that the distinction in total production prices that results…

Q: In order to maximize profits, the firm in a perfectly competitive industry produces where: Minimum…

A: In the producer's theory, a rational producer will always try to produce at a level where it…

Q: A perfectly competitive industry achieves allocative efficiency in the long run. What does…

A: Answer: Correct option: (C) Explanation: Allocative efficiency: allocative efficiency in the long…

Q: If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm…

A: A firm will maximise profit where marginal revenue is equal to marginal cost.

Q: Market failure occurs when A) resources are misallocated or allocated inefficiently. B)…

A: Market failure refers to when the market is in disequilibrium condition because of market…

Q: At what output rate does the firm maximize profit or minimize loss?

A: After marginal revenue exceeds marginal cost,at that output rate firms maximize profit.

Q: The short run is a time period such that O the existing firms in the market do not have sufficient…

A: The short run is a time period such that the firms which are prevailing in the market don't have…

Q: A perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity…

A: Perfectly competitive market refers to the market structure in which there are large number of…

Q: In the short run, the firm should continue to produce if and only if a.Price exceeds average total…

A: Total fixed cost is independent of output produced whereas variable cost varies with the level of…

Q: In the short run, a perfectly competitive firm's economic profits Question 7 options: must be…

A: In perfect competition there are large number of firms selling identical goods.

Q: How many of the following statements are true? (i) Maximising profit involves maximising Revenue…

A: Profit maximization is the ultimate goal of the firm.

Q: Demand in an industry is expected to decrease permanently. Before the decrease in demand the…

A: A perfectly competitive market is one that has a large number of buyers and sellers, firms selles…

Q: 1/32/3 1. Suppose a perfectly competitive firm's production function is f(x1,x2) = xx, the price of…

A: The mathematical expression that describes the maximum output that can be produced by using…

Q: Increaseing marginal returns means that as the firm expands its output, its: OPTIONS long-run…

A: Increase in marginal returns: An increase in marginal returns refers to the variable input when an…

Q: Jakarta City cab operator appears to be making positive profits in the long run after carefully…

A: The Competitive Forces Model is a significant instrument utilized in essential investigation. The…

Q: Determine a firm’s profit-maximizing decision in the short run.

A: Profit-maximization is a rational producer's objective under which the producing agent attempts to…

Q: An increase in the cost of an input will cause the supply curve of the output to shift left. a.…

A: Supply curve reflects the positive relationship between price and supply of goods. There are various…

Q: What might occur when competition drives down the price of a good to a marginal cost?

A: Perfect competition is a market system in which all producers and consumers have complete and…

Q: The following statements are true in a perfect market except which one? A. Resources are allocated…

A: Perfect competition(PC) is defined as a situation where the market has ample amount of buyers and…

Q: If firms "satisfice" this means that a. objectives such as profit are not maximized. b. managers…

A: In a market, a firm's cost and pricing decision provide information about its behavior and market…

Q: If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm…

A: Marginal cost is calculated by dividing change in total cost by the change in quantity. Marginal…

Q: Urban Decay Cosmetics produces q units of setting sprays and their short-run total cost is given by…

A: Total cost measure the cost incurred in process of production.

Q: The profit maximizing output level for this firm is

A: Any firm maximizes profit where MR=MC

Q: Choose the statement that is true. Fixed costs in the long run can become variable in the short run.…

A: Out of the given statements, only the fourth statement is true. The reason for this is explained…

Question

If a profit-maximizing firm finds that, at its current level of production, MR > MC, it will *

a)decrease output.

b)earn greater profits than if MR = MC.

c)shut down.

d)increase output.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Determine a firm’s profit-maximizing decision in the short run.
In the short run, the firm should continue to produce if and only if a.Price exceeds average total cost. b.Price exceeds average fixed cost. c.Price exceeds average variable cost. d.Marginal revenue equals marginal cost. e.Price exceeds marginal cost.
Which cost concept is used to determine the level of output at which a firm neither makes a profit nor incurs a loss? a) Sunk cost b) Break-even point c) Opportunity cost d) Variable cost
Increaseing marginal returns means that as the firm expands its output, its: OPTIONS long-run average total cost decreases. long-run average total cost increases. short-run average total cost decreases. short-run average total cost increases.
Suppose an increase in the cost of land increases the firm's fixed costs, as a result, average total cost increases from ATC2 to ATC1. What is profit maximizing quantity and price after the increase in average total costs? After the increase in average total costs does the firm make economic profit, economic loss or breaks even? How do you know? explain your answer.
At what output rate does the firm maximize profit or minimize loss?
“Even if a firm is losing money, it may be better to stay in business in the short run.” Is this statement ever true? Under what condition(s)?
Under a PCM, the long run equilibrium situation is that, Economic profit is equal to zero. Is this a breakeven point for all firms in the market? Please explain conceptually.
An ice cream shop owner is deciding whether or not to keep her ice cream shop open during the winter. She will shutdown during the winter if she expects:A.revenue to be less than variable costs.B.revenue to be less than total costs.C.revenue to be declining as output expands.D.revenue to be less than average fixed costs
“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?
Which of the following represents a long-run decision for the firm? a. rehiring workers who were previously laid off. b. determining what price to charge for a given level of output. c. deciding how much output to supply to the market at the current market price. d. building another wing on the plant in order to add a new assembly line. answer. (d. building another wing on the plant in order to add a new assembly line.) Please help me explain this questions. Thanks in advance
The intersection of a firm's marginal revenue and marginal cost curve determines the level of output at which Question 4 options: a) total revenue is equal to variable cost b) total revenue is equal to fixed cost c) total revenue is equal to marginal cost d) profit is maximized