A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. Is the efficient scale of the firm more than, less than, or exactly 100 units?

A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. Is the efficient scale of the firm more than, less than, or exactly 100 units?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 3QP

See similar textbooks

Related questions

Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…

A: Part a) Since , the firm is perfectly competitive the price must be equal to MC which is the profit…

Q: A firm operates in a perfectly competitive market and is producing at the profit-maximizing output.…

A: In a perfectly competitive market, there are many firms producing identical goods. Firms do not have…

Q: 1. Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: 1. Claude's Copper Clappers sells clappers for $65 each in a perfectly competitive market. At its…

A: The correct solution is option c.

Q: Suppose there is a decrease in the demand for high-definition televisions. What effect might this…

A: The demand curve shifts when there is a change in other factors other than price of commodity. If…

Q: A competitive firm would benefit from charging a price below the market price because the firm would…

A: When talking about perfectly competitive market, it is the market with many buyers and many sellers.

Q: Why is the demand curve facing a firm in an imperfectly competitive industry downward sloping? What…

A: Any economic market that does not meet the rigorous assumptions of a hypothetical perfectly…

Q: When the marginal-cost curve lies below the marginal-revenue curve a. the firm cannot improve…

A: Marginal cost is the price at which the production of a firm takes place for a commodity which…

Q: Outline the determinants of entry and exit by firms in competitive markets. Explain the impact on…

A: The perfect competition is the form of market with large number of buyers and sellers, selling…

Q: 7. Short-run and long-run effects of a shift in demand Suppose that the turkey industry is in…

A: when CDC announces that a chemical found in turkey is causing bacterial infections to spread around…

Q: Question 1 Imagine a firm in a competitive market comes up with a new production method, which…

A: After halves of marginal cost at each level of quantity then following is the impact can be seen…

Q: 7..Comment on the following statement about perfect competition: A firm that has incurred a lot of…

A: When we consider the short-run market then there will be both fixed costs as well as variable costs…

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

A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If you…

Q: 1. The law of diminishing returns indicates that: a. as extra units of a variable resource are added…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 8. Short-run and long-run effects of a shift in demand Suppose that the turkey industry is in…

A: The turkey industry is in long-run equilibrium at price of $5 per pound of turkey and a quantity of…

Q: 1. If a market is characterized by economies of scale, then which of the following is true: a. this…

A: As a product is put into manufacturing process, cost takes place and business follow ups. Business…

Q: 5. Competition Bob's lawn-mowing service is a profit-maximizing, competitive firm. fixxed cost. He…

A: Given that, Price = $30 Total cost per day = 320 Fixed cost = $70 Lawns per day = 10 Total variable…

Q: A perfectly competitive firm's demand curve is perfectly elastic at the market-determined price.…

A: Given The statement is A perfectly competitive firm's demand curve is perfectly elastic at the…

Q: 3. In competitive markets economic profit becomes zero in the long-run. However, it is also possible…

A: In competitive markets,economic profits become zero in the long run but accounting profit can be…

Q: 2.) Production, Inputs, and Cost: Building Blocks for Supply Analysis First, use the following…

A: Marginal revenue (MR) is the increase in revenue that results from the sale of one additional unit…

Q: 26. Which of the following statements about profit maximization is true? a. It is something that all…

A: Profits = Total Revenue - Total Cost

Q: 34. In the long run, a profit maximizing]firm will choose to exit a market when a. fixed costs…

A: If a market where there is freedom of entry and exit, the firm that suffer loss will exit from the…

Q: 3. Kosar Manufacturing has collected the following information on one of its major products. Most…

A: Total cost and total inventory cost and back order cost is showing below in the spread sheet.

Q: Question 6.6. A firm should increase the quantity of output as long as its marginal revenue is…

A: In a firm, there are several costs and revenues related to the accounting procedure. The marginal…

Q: In a perfectly competitive market if the quantity produced by a firm is less than the optimal amount…

A: The price is decided by the market forces of demand and supply. The firm is price taker only. P=MC…

Q: Identify a market that resembles some of the key characteristics of a perfectly competitive market…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: You own a company that produces widgets. You currently produce 100 widgets; each widget sells for…

A: Total Revenue Total revenue is the totality of a sales amount from all of its products and services…

Q: QUESTION 2: Consider a competitive market. There are X number of firms in this market. Every firm is…

A: Ans.(a): As the number of firms in a market goes on increasing, the competitive market form becomes…

Q: Lise the blue paints (circle symbal) to plot total revenue and the green points (triangle symbal) to…

A: The correct answer is given in the second step.

Q: 9 The cereal has only two listed ingredients: wheat and a preservative. The retail price is C$4.50…

A: A nation can have a comparative advantage and be efficient in production of wheat. In such cases,…

Q: 1.The market for fertilizer is perfectly competitive. Firms in the market are producing output but…

A: A perfectly competitive market is a concept where there are a large number of sellers and buyers…

Q: M/c question - Micro 23) When a firm in a competitive market receives $5000 in total revenue, it…

A: "Since you have asked multiple questions, we will solve first question for you .If you want specific…

Q: With the aid of a diagram, explain the profit maximising rule and explain four reasons why firms aim…

A: Profit maximization is a rule in economics where marginal cost (MC) is equal to marginal revenue…

Q: Concept Question 2.11 Question Help Suppose that a perfectly competitive firm faces a market price…

A: The profit maximizing (loss-minimizing) level of output would be where price equates the marginal…

Q: The following graph shows the daily market for large cardboard boxes in San Francisco.…

A: Meaning of Market and Perfect Competitive Market: The term market refers to the situation where…

Q: 9. The chicken farming industry in Northern New York is extremely profitable and I would really like…

A: In the given scenario, for an individual, it has become difficult to find suitable land as public…

Q: 2. Consider the following economic scenario: A new korean restaurant opens in a city. People are…

A: a. Increase in the quantity demanded for Korean food will cause the price to rise. Now since it is…

Q: 1. The market for manicures and other nail treatments is very competitive. How would the following…

A: In a competitive market, the supply of any item is affected by various market factors such as…

Q: Suppose Latasha runs a small business that manufactures teddy bears. Assume that the market for…

A: Profit maximizing quantity is determined where MR=MC or the profit is maximum. For the price given:…

Q: Consider the competitive market for steel. Assume that, regardless of how many firms are in the…

A: All answers given below,

Question

Question 1
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. Is the efficient scale of the firm more than, less than, or exactly 100 units?

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of 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

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 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

Question 1 A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?
Question 3 A profit maximizing firm in a competitive market is currently producing 150 units of output at a price of $20. Average total cost is $8 and fixed cost is $200. What is this firm’s profit? $1,800 $2,000 $800 $1,600
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200.\a. What is its profit?b. What is its marginal cost?c. What is its average variable cost?d. Is the efficient scale of the firm more than, less than, or exactly 100 units?
multiple choice Assume that the tuna fishing industry is perfectly competitive. Which of the following best characterizes the industry if, as demand for tuna increases, fishing boats have to go farther into the ocean to harvest tuna? 1- a constant-cost industry 2- a fixed-cost industry 3- a decreasing-cost industry 4- an increasing-cost industry
Question 14 “Healthy Morning” is a firm that produces breakfast cereal and suppose breakfast cereal is a competitive market. The firm earned $10,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold? $10 and 500 units $5 and 1000 units $10 and 1000 units $5 and 500 units
QUESTION 8 When the marginal-cost curve lies below the marginal-revenue curve a. the firm cannot improve its profit since revenue is already greater than cost. b. marginal revenue is greater than marginal cost, and the firm should therefore increase production to increase profits. c. marginal revenue is greater than marginal cost, and the firm should therefore decrease production to increase profits. d. marginal revenue is less than marginal cost, and the firm should therefore decrease production to increase profits. e. it is not possible for this firm to increase profits since it is failing to operate at an efficient point.
Figure 7.1 shows a ﬁrm’s total revenue and total cost curves. If the ﬁrm were producing Q1, it should a. expand output to Q2 to maximize proﬁt. b. reduce output to zero to maximize proﬁt. c. expand output to Q3 to maximize proﬁt. d. expand output beyond Q3 to maximize proﬁt. e. continue to produce Q1, which is the proﬁt-maximizing output.
Question 1c. Why does price equal marginal revenue for the perfectly competitive firm?What is the relationship to the demand curve for the firm?
Question 6 Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to... Group of answer choices increase. remain unchanged. decrease by less than 20 percent. decrease by more than 20 percent.
Question 4 If firms are competitive and profit maximizing, the price of a good equals the... Group of answer choices marginal cost of production. average variable cost of production. total cost of production. average total cost of production.
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?
1. Which of the following, in perfect competition, is most likely to shift a market’s supply curve to the right? The number of consumers decreases. The number of suppliers decreases. There is an improvement in production technology. The price of a substitute good increases. 2. Which of the following gives an example of an implicit cost for a bakery? The cost of flour used to make bread Bakeries have no implicit costs because they are monopolistically competitive. The foregone payments that could have been earned by renting out the bakery’s storefront to another firm The wages the bakery pays to its employees 3. A producer knows that the price elasticity of demand for his product is -0.67. He wants to increase quantity demanded by 33%. By what percentage does he need to change the price? -0.221 -2.03 -0.493 0.493