Answered: Explain the statement " the existence…

Explain the statement " the existence of extra-normal or economic profit will ensure their elimination in a perfectly or purely competitive industry"

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 17RQ: Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive...

See similar textbooks

Related questions

Q: a. The industry S P* = 5 b. A representative firm MC ATC P*= MR=$5 0 1,755,000 0 100 250 300 340 10.…

A: Purely competitive industry is also called perfectly competitive industry. A theoretical market…

Q: QUESTION 1 If your fixed costs are $10,000, your variable costs are $10,000, and your revenue is…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Q2 (a). Assume apples are sold in a perfectly competitive market and firms are making zero economic…

A: Perfect competition market refers to a form of market in which there are a large number of buyers…

Q: Case D: Apex Company. Apex is a perfectly competitive firm. It has total fixed costs of $300/day…

A: Shutdown point refers to a level of production at which a firm starts to incur heavy losses such…

Q: Price MC 华0 ATC $8 华6 MR 出4 $ 3 * Quontity 10 20 30 40

A: In perfectly competitive market, Price is constant so it is equal to marginal revenue. Firms do not…

Q: Given the operations of a peanut firm under perfect competition and assuming that the price of…

A: The price of the peanut butter = 35 The fixed cost = 50 Quantity = 5

Q: Why does a purely competitive firm not charge price above the market price? Why does it not charge…

A: In a perfect competition market structure, there exist a large number of buyers and a large number…

Q: Question 23 If a perfectly competitive firm incurs an economic loss, it should shut down…

A: In a perfectly-competitive market there are a large number of buyers selling homogeneous-products to…

Q: The following table contains revenue and cost information for a perfectly compet firm producing…

A: given total revenue and variable cost Fixed cost remains the same Total cost = fixed cost +…

Q: You are advised to promote perfectly competitive firms in the industry, what would be your…

A: All the firms in the perfectly competitive market structures produce identical or homogenous goods…

Q: he table below shows the cost information for a firm in a perfectly competitive industry. What…

A: Shutdown rule enables us to take decisions regarding shutting down of the firm's production in short…

Q: QUESTION 23 If a perfectly competitive firm incurs an economic loss, it should: Shut down if this…

A: Dear student, you have asked multiple questions in a single post. In such a case, I will be…

Q: A perfectly competitive firm produces good X and has the following weekly cost data. ( Q = total…

Q: Neatly draw the Average Cost Family curves below. Label everything. Assume a purely competitive firm…

A: In a competitive market there are large number of firms selling identical products.

Q: 12. If the price is less than average total cost for a perfectly competitive firm in the short run,…

A: Perfect competition is the market structure where there are large no of buyers and sellers selling…

Q: Suppose that Maggie's Farm Organics, a perfectly competitive firm, is producing an Output equal to…

A: In perfect competition, eqm Q(quantity) is found by the intersection of MC(marginal cost) and…

Q: The cost Data in the following table are for Marshals meats , a perfectly competitive firm. Out…

A: Hi Student, thanks for posting the question. As per the guideline we are providing answers for the…

Q: Consider a perfectly competitive firm, with the cost information provided on a graph below. MC р ATC…

A: We have given cost structure of a competitive firm and price at which is supply the good.

Q: 2. Discuss the following statement: 'In the real world there is no industry which conforms precisely…

A: here we discuss the following statement as follow;

Q: Question: PLease explain in detail with graphical representation of Industry’s long run supply curve…

A: The long run Equilibrium exists when demand and supply intersect which is shown in part b of figure.

Q: Neatly draw the Average Cost Family curves below. Label everything. Assume a purely competitive firm…

A: Given below are the average cost curves of a perfectly competitive firm. It is given that the firm…

Q: Is the following statement true? "A firm that operates in a perfectly competitive market will earn…

A: When there is a process innovation then it leads to a lower cost of production because innovation…

Q: Pindyck & Rubinfeld, 8e. Ch 8 #7. Suppose the same rm's cost function is C(q) = 4q 2 + 16.…

A: Solution -Given in the question -C(q) = 4q2 +16.......(1)Market Price = $20 and Industry is…

Q: Below are the short-run data of a representative firm in a perfectly competitive industry. The…

A: Here, the given table shows the cost schedule of a perfectly competitive firm at different output…

Q: ce: $58 Cost: TC = 10Q + 0.03Q2 Solve for the profit-maximizin

A: In the perfect competition there exist huge number of sellers and buyers. There occur free entry and…

Q: In Pakistan internet service is ought to be considered as the perfectly competitive industry.…

A: Answer: (a). It is given that the internet service provider is ought to be considered as a perfectly…

Q: how does firm maximize its profit in perfect competition? discuss in detail with help of graph. also…

A: Perfect competition refers to the situation where there are large number of prouder and consumers…

Q: Assume apples are sold in a perfectly competitive market and firms are making zero economic profit.…

A: Perfect competition is a type of market structure.

Q: 2. List the features that characterize a perfect competitive market.

A: 2. Feature of perfect competition market:- * Large number of buyers and sellers. * homogeneous/…

Q: ncludes the firm’s dem

A: Perfect competition is a theoretical structure of market in which all firms tend to sell an…

Q: The following table depicts the cost and revenue structure of a profit-maximizing firm. FC Q VC AVC…

Q: Question 16 For a purely competitive firm: C marginal revenue will graph as an upsloping line. C the…

A: Answer - Given in the question - For purely competitive firm Evaluating the options - 1. Marginal…

Q: Classify the statements based on whether each describes a perfectly (purely) competitive firm…

A: A perfectly competitive firm is a price taker, which means it takes the price set by the market…

Q: What is the profit-maximizing level of output? Calculate Apex’s profit. If the market price dropped…

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

Q: 15. In the long run, any firm will eventually leave the industry if А. Price does not at least cover…

A: In short run firm can bear loss till P>=AVC but in long run if firm bears loss then leaves the…

Q: 20 What is the key characteristic of perfect competition? A One firm sells a highly demanded…

A: Answer- "Thank you for submitting the question but we, are authorized to solve one question at a…

Q: Explain perfect competition in detailed explain profit maximization graphically

A: Perfect competition is a type of market which is characterized by a large number of buyers and…

Q: If P = MC and MC > ATC, then a perfectly competitive firm will earn ________ profits. A) break-even…

A: A perfectly competitive firm has no control over price and to maximize profit a firm produces where…

Q: When should a firm shut down? In other words, what is the shut down point for a firm in perfect…

A: There are different types of costs that a firm encounters while making production decisions. These…

Q: Use the following demand schedule to determine total and marginal revenue for each possible level of…

A: Below is the given data: The price at each level of sales = $2 Marginal revenue at each level of…

Q: Use the table below listing Average Total Cost (ATC)d and Marginal Cost (MC) for a firm in perfect…

A: Perfect competition is the market structure where there are large no of buyers and sellers selling…

Q: Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 600 wands,…

A: Given, Output = 600 wands Price = $8 Marginal cost (MC) = $8 Average total cost = $20…

Question

Explain the statement " the existence of extra-normal or economic profit will ensure their elimination in a perfectly or purely competitive industry"

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

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

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

The table below shows the cost information for a firm in a perfectly competitive industry. What would be the shut down price for this firm? Q FC VC TC MC AFC AVC ATC 0 275 0 275 1 275 8.1 283.1 8.1 275.00 8.10 283.10 2 275 11.8 286.8 3.7 137.50 5.90 143.40 3 275 16.7 291.7 4.9 91.67 5.57 97.23 4 275 23.4 298.4 6.7 68.75 5.85 74.60 5 275 32.5 307.5 9.1 55.00 6.50 61.50 6 275 44.6 319.6 12.1 45.83 7.43 53.27 7 275 60.3 335.3 15.7 39.29 8.61 47.90 8 275 80.2 355.2 19.9 34.38 10.03 44.40 9 275 104.9 379.9 24.7 30.56 11.66 42.21 10 275 135 410 30.1 27.50 13.50 41.00 11 275 171.1 446.1 36.1 25.00 15.55 40.55 12 275 213.8 488.8 42.7 22.92 17.82 40.73 13 275 263.7 538.7 49.9 21.15 20.28 41.44 14 275 321.4 596.4 57.7 19.64 22.96 42.60 15 275 387.5 662.5 66.1 18.33 25.83 44.17 16 275 462.6 737.6 75.1 17.19 28.91 46.10 17 275 547.3 822.3 84.7 16.18 32.19 48.37 18 275 642.2 917.2 94.9 15.28 35.68 50.96 19 275 747.9 1022.9 105.7 14.47 39.36 53.84…
Explain perfect competition in detailed explain profit maximization graphically
Question 13 If a firm operating in a competitive industry shuts down in the short run, it can avoid paying Group of answer choices fixed costs. variable costs. all (total) costs. nothing. The firm must pay all its costs, even if it shuts down.
38. Easy entry and exit ensure that perfectly competitive firms cannot make a long-run economic profit. True False
31) If P = MC and MC > ATC, then a perfectly competitive firm will earn ________ profits.A) break-even B) positive C) zero D) negative
how does firm maximize its profit in perfect competition? discuss in detail with help of graph. also describe the shut down conditions for a firm
Case D: Apex Company. Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10 Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250 Answer the following questions: If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? Comment on your answers to parts (1) and (2).
The following table shows the output and total cost for a firm in a purely competitive industry Output TC AC MC 0 40 1 95 2 115 3 130 4 150 5 175 6 210 7 260 8 330 Is the firm operating in the short-run or long run? Give a reason to your answer
A perfectly competitive firm produces good X and has the following weekly cost data. ( Q = total output; TFC = total fixed cost; TVC = total variable cost): Q (units) TFC ($) TVC $ TC ($) ATC $ AVC $ MC $ 0 0 120 1 172 2 219 3 261 4 300 5 342 6 389 7 441 8 499 9 565 10 641 (a) Complete the above table. Round off values to the nearest two decimal places. (b) For each of the following prices determine this firm’s profit- maximising (or loss-minimising) output per week in the short run, and calculate the weekly profit or loss. Show your calculations (to two decimal places). (b.i) $42.50 (b.ii) $47.50…
PART C: MARKET ANALYSIS Pacesetter is a manufacturer of three-ring binders operating in a perfectly competitive industry. The Table below shows the firm's cost and revenue schedule Quantity (cases) Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost Total Revenue Profit (or Loss) 0 $0 $76 1 30 106 $40 2 50 3 134 4 140 5 160 6 114 7 150 8 190 9 316 PART C: MARKET ANALYSIS (i) Complete the Table above by filling in the blank cells. (ii) Based on the above Table, Pacesetter’s profit maximizing or loss minimizing level of output is __________; and the (profit is _________) or (loss is __________) (iii) Should the firm continue to…
11. Given perfect competition show on a diagram that profit maximisation implies marginal revenue equals marginal cost equals price. Briefly explain how and why this outcome differs from the equilibrium. Not sure if the attached diagram helps please explain how to solve this questionn
Consider the following short-run data for a perfect competitor. Use the data to answer the following questions. Justify your answers and calculations. Quantity Demanded Price TC TVC MC 0 22 150 - 1 20 2 15 3 22 4 34 5 54 6 78 d) What is the profit maximizing level of output for this producer? e) Calculate profits or losses at all levels of output.