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In 250 words or less, answer the following question. Explain how a firm chooses a level of output to maximise profit.
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- Show on the graph the profit-maximizing output level Q*. Show on the graph a rectangle that represents the amount of the economic profit (or loss) associated with the profit-maximizing output level. Is there a loss or a profit?Using the previous table, what is the profit maximizing level of output?You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you infer about the profits of this firm?
- Evaluate the view that the main goal of firms will always be profit maximization.What two lines determine whether a firm is making positive or negative or zero profits?If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explain
- Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.Why is perfect competition assumed to be the best market situation in most cases? Draw a graph showing the long run result of perfect competition and explain why it benefits society.Use the graph above to answer these questions: What is the profit-maximizing level of output? What is the economic profit? What is the per-unit amount of profit at the profit-maximizing level of output?
- Hannah has a small business making clothing alterations. Which of the following products would dramatically affect her profit margins if the price were to decrease for that product? A. dresses B. thread C. sewing machinesPlease graph what the market looks like with a short decrease in demand and what one firm looks like with a short run decrease in demand. Please make sure to graph your answer with all necessary labeling.The graph shows the market for Mickey's Mountain Bikes. 1. What is the profit-maximizing output per week and the price per bike? 2. At this level of output, what is the firm's average total cost, and the economic profit per week? 3. What can we conclude as a result of the economic profit?
