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- Why will losses for firms in a perfectly competitive industry tend to vanish in the long run?What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?Fabulous Farms operates in a perfectly competitive market. Which of the following is required for Fabulous Farms to both maximize profits and achieve allocative efficiency? A P = MC B P > MC C P < MC D P = MC – MR
- he following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. Complete the cost table below. (Round your responses to two decimal places.) q TFC TVC TC AVC ATC MC 0 $4040 $0 $4040 long dash— long dash— long dash— 1 4040 125125 165165 125125 165165 125125 2 4040 167167 207207 83.583.5 103.5103.5 4242 3 4040 195195 235235 6565 78.3378.33 2828 4 4040 209209 249249 52.2552.25 62.2562.25 1414 5 4040 237237 277277 47.447.4 55.455.4 2828 6 4040 279279 319319 46.546.5 53.1753.17 4242 7 4040 335335 375375 47.8647.86 53.5753.57 5656 8 4040 405405 445445 50.6350.63 55.6355.63 7070 9 4040 489489 529529 54.3354.33 58.7858.78 8484 10 4040 587587 627627 58.758.7 62.762.7 9898 Using the…Cost figures for a hypothetical firm are given in the following table. Use them for the exercises below. The firm is selling in a perfectly competitive market. Output Fixed AFC Variable AVC Total ATC MC Cost Cost cost 1 $50 50/1=50 $30 30/1=30 30+50=80 80/1=80 NA 2 $50 50/2=25 $50 50/2=25 50+50=100 100/2=50 (100-80)/(2-1)=20 3 $50 50/3=16.67 $80 80/3=26.67 50+80=130 130/3=43.33 (130-100)/(3-2)=30 4 $50 50/4=12.50 $120 120/4=30 50+120=170 170/4=42.50 (170-130)/(4-3)=40 5 $50 50/5=10 $170 170/5=34 50+170=220 220/5=44 (220-170)/(5-4) =50 What can you expect from an industry in perfect competition in the long run? That is, what will the price be? What quantity will be produced? What will be the relation between marginal cost, average cost, and price?The market for fertilizer is perfectly competitive.Firms in the market are producing output but arecurrently incurring economic losses.a. How does the price of fertilizer compare to theaverage total cost, the average variable cost, andthe marginal cost of producing fertilizer?b. Draw two graphs, side by side, illustrating thepresent situation for the typical firm and for themarket.c. Assuming there is no change in either demand orthe firms’ cost curves, explain what will happenin the long run to the price of fertilizer, marginalcost, average total cost, the quantity supplied byeach firm, and the total quantity supplied to themarket.
- Suppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat". DEMAND SCHEDULE Price (BDT per plate) Quantity demanded (plate per hour) 10 900 25 675 30 600 40 450 50 300 70 0 COST SCHEDULE OF TASTY TREAT Output (plate per hour) Marginal Cost (BDT per extra plate) Average Variable Cost (BDT per plate) Average total cost (BDT per plate) 40 20 25 90 50 10 10 75 60 30 20 55 70 50 23 50 80 70 35 60 90 85 50 77 a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and…Assume that Harry Ellis produces table lamps in the perfectly competitive table lamp market. OUTPUT PER WEEK TOTAL COSTS AFC AVC ATC MC 0 $100 1 150 2 175 3 190 4 210 5 240 6 280 7 330 8 390 9 460 10 540 Fill in the missing values in the table. Suppose the equilibrium price in the table lamp market is $50. How many table lamps should Harry produce, and how much profit will he make? If next week the equilibrium price of table lamps drops to $30, should Harry shut down?Will a perfectly competitive market display allocative efficiency? Why or why not?
- How a firm respond to economy profits and economy losses in perfectly competitive market?Assume that the cost data in the following table are for a purely competitive producer: TotalProduct AverageFixed Cost AverageVariable Cost AverageTotal Cost Marginal Cost 0 1 $60.00 $45.00 $105.00 $45.00 2 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 8 7.50 40.63 48.13 55.00 9 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 Instructions: If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce. a. At a product price of $56.00 (i) Will this firm produce in the short run? (Click to select) No Yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? (Click to select) Not applicable Loss-minimizing…Assume that the cost data in the following table are for a purely competitive producer: TotalProduct AverageFixed Cost AverageVariable Cost AverageTotal Cost Marginal Cost 0 1 $ 60.00 $ 45.00 $ 105.00 $ 45.00 2 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 8 7.50 40.63 48.13 55.00 9 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 a. At a product price of $56.00 (i) Will this firm produce in the short run? yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? profit- maximizing output = 9 units per firm (iii) What economic profit or loss will the firm realize per unit of output? Profit per unit = $ 16 b. At a product price of $41.00 (i) Will this firm produce in the short run? Yes (ii) If it is preferable to produce, what will be the…
