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
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- Explain perfect competition in detailed explain profit maximization graphicallyExplain how the firm would maximise its profit, assuming that it faces conditions of perfect competition, in both the short run and the long run. Be careful to explain the conditions under which the firm would shut down or close.explain the down-sloping and upsloping long run ATC. Why may pure competition earn economic profits in the short run but not in the long run?
- Use the diagram below to explain the equilibrium of the firm under perfect competition. Clearly explain the economic profit (or loss) and indicate what equilibrium means in this context. (15) NB: You must sketch the diagram and label it correctlyAt what point does a firm in a perfectly competitive industry shut down? Explain with graph.Galaxy is a firm in perfectly competitive market. Galaxy currently produces and sells 400 units of toys. Its total revenue is $4,000; the marginal cost of producing the last toy is $12; and the average total cost of producing the the last toy is $8. Is the Galaxy maximizing its profit, or should it increase or decrease output in order to increase its profit? Explain to get full credit.
- How does perfect competition address the problems of Allocative and Productive efficiency? Assume this is a constant or increasing cost industry. Start your analysis from a point of economic profit or loss, your choice. Explain this in no less than 50 words, or less if you employ graphs. In your explanation, define each term, define triple equality, does it matter if this is the short or long run? why? How is Allocative or Productive efficiency achieved, or not? How, if at all, do the existence of externalities alter your analysis?Question 7 When should a firm shut down? In other words, what is the shut down point for a firm in perfect competition?Using examples, explain the down-sloping and upsloping long run ATC. Why may pure competition earn economic profits in the short run but not in the long run?
- The cost data in the following table are for Marshall’s Meats, a perfectly competitive firm. Round your answers to 2 decimal places. Output Average Variable Cost Average Total Cost Marginal Cost Total Cost 0 / / / $110 1 $ $ $ 140 2 160 3 190 4 224 5 280 6 342 7 458 a. Complete above the table. b. What is the shutdown price? Shutdown price: $ c. If the market price of the product is $56, what quantity will Marshall’s Meats produce? What will be its profit or loss?Given the following information, state whether the perfectly competitive firm should shutdown or continue to operate in the short run. Draw the relevant diagram and show yourcalculations clearly. Q = 100; P = Tk 10; AFC = Tk 3; AVC = Tk 4Draw a graph representing a perfectly competitive firm earning an economic profit. (Make sure to show both the firm and the industry graphs) What happens over-time, if many firms are earning economic profits? Is this good or bad for consumers? Explain. Note: don't use chat gpt
