e. judge. 6. Assume a perfogly competitive firm incurs a total cost of $10.000, marginal cost of $38, and fixed cost of $2,000. It sells 200 units of its product at a market price of $38 per unit, Which of the following is true in this case The firm earns an economic profit of $7,600. TR200 CD=7,600 tess 7,600-1000-3500 b. The firm incurs an economic loss of $7,600. 402000/900=50 c. The average variable cost of production exceeds the market price. d.The average total cost of production is less than the market price. e. The firm earns an economic profit of $6,600.
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- Suppose that a perfectly competitive firm faces a market price of $7 per unit. The output level corresponding to a marginal cost of $7 per unit is 1,000 units. At 1,000 units, its average variable costs equal $8 per unit, and its average fixed costs equal $1 per unit. The firm's profit-maximizing (or loss-minimizing) output level = . Write number only. The firm's economic profit (or loss) at this output level = . Write either profit number or loss number: e.g. profit 2000.Assume that a firm in a perfectly competitive industry has the following total cost schedule:OUTPUT (UNITS) TOTAL COST ($) 10 110 15 150 20 180 25 225 30 300 35 385 40 480a. Calculate a marginal cost and an average cost schedule for the firm. b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are profits per unit? What are total profits? c. Is the industry in long-run equilibrium at this price?Assume that a firm in a perfectly competitive industry has the following total cost schedule: Calculate a marginal cost and an average cost schedule for the firm to complete the following table. Output Total Cost Marginal Cost Average Cost (units) ($) ($) ($) 10 440 15 600 20 720 25 900 30 1,200 35 1,540 40 1,920 If the prevailing market price is $68 per unit, units will be produced. Profits per unit will be and total profits will be . Is the industry in long-run equilibrium at this price? No Yes
- Explain the marginal revenue and marginal cost approach to profit maximization and use it to describe profit, loss, and shut down situations for the purely competitive firm.A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $150. Output FC VC TC TR Profit/Loss 0 $100 $ 0 ___ ___ ___ 1 100 100 ___ ___ ___ 2 100 180 ___ ___ ___ 3 100 300 ___ ___ ___ 4 100 440 ___ ___ ___ 5 100 600 ___ ___ ___ 6 100…true/false 1- if a perfectly competitive firm shuts down in the short run, its variable cost equals zero. 2- if a perfectly competitive firm shuts dowm in the short run, its total cost equals zero.
- A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues: TC = $830,000 VC = $525,000 TR = $428,000 At that optimal level of output, what profit (loss) does the firm earn?37) In a perfectly competitive industry, the market price of the product is $15. Firm A is currently producing 300 units. The firm's marginal cost is $15, its fixed costs amount to $1000 and its average variable cost equals $10. Which one of the following is true for this firm?a) it’s profits are 500 $b) it’s profits are -500 $c) it’s profits are -1500 $d) it’s profits are 1500 $Table 9.1 Output (Q) Total Fixed Costs Total Variable Costs 0 20 0 1 20 5 2 20 7 3 20 10 4 20 15 5 20 21 Table 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $5: A. the firm suffers a loss but is better at producing at the output where MR=MC. B. the market price is lower than its marginal cost at the profit-maximizing output level. C. the market price is lower than the average variable cost at the profit-maximizing output level. D. the firm suffers a loss and is better off shutting down.
- 40) A perfectly competitive firm will earn ________ economic profits in the range of output for which the firm's price is above its minimum average total cost. A) positive B) negative C) zero D) Any of the above answers could be correct. 41) If a perfectly competitive firm's average total cost curve is below its demand schedule at any level of output, then the firm will earn ________ profits. A) positive B) breakeven C) negative D) zero 42) A perfectly competitive firm ________ at the level of output where P = ATC. A) earns an economic profit B) suffers an economic loss C) breaks even D) shuts down 43) If P = MC and MC ATC, then a perfectly competitive firm will earn ________ profits. A) positive B) zero C) negative D) break-even 44) If a perfectly competitive firm is currently producing where P = MC and MC = ATC, then the firm will earn ________ profits. A) positive B) zero C) negative D) above normal 45) If…11. The graph below shows the marginal revenue, marginal cost, and average total cost at different quantities for a firm in a perfectly competitive market. If this firm chooses to produce no output in the short run, what must the market price be? A-Below $20 $21-$30 $31-$40 $41-$50 Above $50 7. firm's implicit costs are $10,000, explicit costs are $5,000, and its total revenue is $10,000. This firm is earning A-normal accounting profit B-positive accounting profit of $5,000 C-positive economic profit of $5,000 D-normal economic profit E-negative accounting profit of $5,0008-3 Outline the conditions under which a firm should produce in the short run rather than shut down, even though it incurs an economic loss5.(Minimizing Loss in the Short Run) Explain the different options a firm has for minimizing losses in the short run