Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should continue producing at the current output. produce a larger level of output. produce a smaller level of output. not enough information given to answer the question.

Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should continue producing at the current output. produce a larger level of output. produce a smaller level of output. not enough information given to answer the question.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter22: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 6CQ: Suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent...

See similar textbooks

Similar questions

A competitive firm's cost of producing q units of output is TC=18+4q+q^2 Its corresponding marginal cost is MC=4+2q The firm faces a market price p = $24. Create a spreadsheet with q = 0, 1, 2, …, 15, where the columns are q, TR, TC, TVC, AVC, MC, and profit. Determine the profit-maximizing output for the firm and the corresponding profit. Should the firm produce this level of output or should it shut down? Explain briefly. Suppose the competitive price declines to p = $12. Repeat the calculations of part a. Should the firm shut down?
Evaluate the following statements. If a statement is true, explain why. If it is false, identify the mistake and correct the error. Assume the market is perfectly competitive. A profit-maximizing firm should select the output level at which the difference between the market price and marginal cost is greatest. An increase in fixed cost lowers the profit-maximizing quantity of output produced in the short run.
Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a firm's average total cost is $11 and its total variable cost is $600. If the price of the product is $3 per unit and the firm follows its optimal strategy, the firm will earn an economic profit equal to
Firms in a perfectly competitive industry maximize profits by: eliminating the competition. producing a higher quality good and setting a price higher than the competition. setting a price equal to the market price. setting a price less than the market price and undercutting the competition.
Suppose a firm operating in a perfectly competitive industry has costs in the short run given by: SRTC = 8 + ½q^2 and therefore MC = q. Assuming that the firm is a price-taker operating in a competitive market, derive an expression for the firm’s supply curve, (the profit maximizing output for the firm as a function of the market price, i.e., q^s = f(p). Assuming the firm is one of 100 identical firms in the industry, what is the short-run supply curve for the industry, i.e., Q^s = f(p)? If demand is given by Q^D = 1000 – 100p, what are the short-run equilibrium price, market quantity, and firm quantity? Is this a long-run equilibrium? [Hint: Calculate firm profit in the equilibrium.]
. Suppose a firm operating in a perfectly competitive industry has costs in the short run given by: SRTC = 8 + ½q2 and therefore MC = q. Assuming that the firm is a price-taker operating in a competitive market, derive an expression for the firm’s supply curve, (the profit maximizing output for the firm as a function of the market price, i.e., q S = f(p). Assuming the firm is one of 100 identical firms in the industry, what is the short-run supply curve for the industry, i.e., Q S = f(p)? If demand is given by Q D = 1000 – 100p, what are the short-run equilibrium price, market quantity, and firm quantity? Is this a long-run equilibrium? [Hint: Calculate firm profit in the equilibrium.]
You are the manager of a firm that sells its product in a competitive market with market (inverse) demand given by P = 50 − 0.5Q. The market equilibrium price is $50. Your firm's cost function is C = 40 + 5Q2. Your firm's marginal revenue is Multiple Choice MR(Q) = 50 − Q. indeterminable based on the information in the question. MR(Q) = 10Q. $50.
Short-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
A firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total costs as C(Q) = 70 + 14Q + 2Q2 What are the firm’s short-run profits? What adjustments should be anticipated in the long run? Given these adjustments, calculate the new optimal quantity and price.
Which of the following is TRUE in long-run competitive equilibrium ("market saturation")? Group of answer choices Firms earn zero economic profit Price is equal to minimum average total cost All of the above are true Firms in the market earn just enough revenue to cover their explicit (accounting) costs and opportunity costs. None of the above are true New firms have no incentive to enter the market
Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged.
The market position of Easy-Freeze Dinners shows that competition is heavy, though marginal competitors are dropping out of the market. Retail prices for Easy-Freeze Dinners have been falling. The firm employs an intensive distribution program. You advise Easy-Freeze Dinners to _______________. A. withdraw from the market B. increase brand awareness through an intensive advertising campaign C. reduce the amount of advertising to maintain profit margins D. find a niche market that can be profitably exploited E. increase the price of the Easy-Freeze Dinners