Answered: If you are a manager in a highly…

If you are a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting, please explain?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section9.3: Perfect Competition In The Long Run

Problem 1ST

See similar textbooks

Related questions

Q: what is difference between perfect and pure competition? Highlight the assumptions of perfect…

A: Pure Competition is a subpart of perfect competition Pure competition is a market situation where…

Q: Answer the questions and define the phrases/terms and explain the relationship between them when…

A: Answer -

Q: must a perfectly competitive industry be in the long run equilibrium if a perfectly competitive firm…

A: The perfectly competitive firm are price takers who accept the industry price. No single firm has…

Q: Can excess profit be earned in this industry in the long run?

A: Excess profit means an amount of profit which is higher than the total cost incurred in production.

Q: Explain how short-run economic profits become long-run economic costs. When profits fall to zero,…

A: A stopwatch or a calendar cannot correctly identify the boundary between the short and long runs. It…

Q: Small “Mom and Pop" firms sometimes exist even though they do not earn economic profits. How can you…

A: Small “Mom and Pop" firms sometimes exist even though they do not earn economic profits. The…

Q: Which are the most likely to be produced in a perfectly competitive industry?

A: A completely competitive market is one in which all businesses sell the same product and where…

Q: The number of firms in an industry is not always a good indicator of the extent to which that…

A: The number of sellers in an industry determines the market share of the firm. A large number of…

Q: Based on the given graph: a. If this firm profit-maximizes, how much output will it produce and…

A: Given;

Q: Should Tim want to maximize his profit in the short-run, how many t-shirts will he produce?

A: Given that the market structure is monopolistic competition, the profit maximizing condition is MC=…

Q: When would a seller possibly decide to exit the industry over the long run? What should product…

Q: What is the equilibrium or profit-maximizing quantity of production for a perfectly competitive…

A: Prefect competitive market is:- 1) in perfect competitive market, there are many number of sellers…

Q: Soft drink industry has been historically profitable why? compare the economies of the concentrate…

A: Soft drink Industries are profitable because:- These industries needed lower investments. This can…

Q: Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100…

Q: What are three short-run outcomes in the perfect competition?

A: In the short-run, the perfect competitive firms, can have three outcomes.

Q: Why do a firm's profit disappear in the long run?

A: The firms operating in the long run, have to adjust and abide by the time frame which would allow…

Q: What type of organization is appropriate in the competitive business environment?Please explain with…

A: Competitive business environment:- A competitive environment can be explained as a framework…

Q: Under what conditions should a competitive firm shut down in the short run?

A: In the short term, a corporation that operates at a loss (where the income is less than the overall…

Q: How do you define 'profit

A: The main objective of the firm in whether competitive or imperfect competition market is Profit…

Q: What are the advantages of pure competition?

A: Answer: A purely competitive business is the most efficient type of operation. This is due to the…

Q: Does a competitive firm’s price equal its marginalcost in the short run, in the long run, or…

A: In perfectly competitive market there are many sellers as well as buyers. Price is given that means…

Q: If you're a manager in a highly competitive business such where should you put your most effort to…

A: As a manager ,the primary responsibility is to look in the profits of the business. Business can be…

Q: Sterling runs a donut shop which which is being operated in a perfectly competitive market where…

A: Firms in perfectly competitive market, are price taking firms because there are a large number of…

Q: Why does perfect competitive market need to be maintained?

A: In an economy, a perfectly competitive market is the place where anyone is allowed to enter or exit…

Q: The vast majority of industries are probably not perfectly competitive. Why then do you suppose…

A: * ANSWER :- * Perfect competition is the most straightforward industry structure, and it serves as…

Q: Looking around your city, what businesses do you think come closest to the model of a perfectly…

A: Looking around, we see that there are very very few businesses that fit into the description of a…

Q: What does it mean to be operating a firm in the "long run?"

A: "Since you have asked multiple questions, we will only first question for you. If you have any other…

Q: Using the figure above, what is profit/loss for the firm?

A: In the case of a profit-maximizing firm, the optimal point of production is where the price is equal…

Q: At his profit maximizing output, what is the total profit earned by Tim?

A: Answer: A monopolistically competitive firm maximizes its profit where the marginal revenue (MR) is…

Q: At the profit-maximizing output level, what will be the relationship between the perfectly…

A: Perfect competition: Perfect competition is a market structure where exists a large number of…

Q: What does that mean in terms of long-run profit?

A: Perfectly Competitive Market is the market in which buyers and sellers are large in numbers and they…

Q: Explain market conditions in the long run

A: In the long run, perfectly competitive marketplaces look different than they do in the short run.…

Q: In order to maximize the profit, what decision do you think is the most important one?

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

Q: What are the requirements for a perfect competition market?

A: Competitive market: - it is a market condition where there are many buyers and many sellers in the…

Q: Mike Wazovsky runs a business that produces marmalade in small jars. He is proud of his business…

A: ATC (Average Total Cost) Average total cost refers to the cost of production per unit of output.…

Q: The firm in pure competitive

A: A theoretical market structure that meets the following requirements is known as pure or perfect…

Q: Crabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each…

A: Here, when analyzing the given information, it can be said that Crabby Bob resturant is facing…

Q: Write down some examples of industries that are (close to) perfectly competitive. What attributes do…

A: Perfect competition is a kind of market in which a large number of suppliers of a homogenous…

Q: What is the firms profit or loss?

A: A firm in an exceedingly competitive market wants to maximise profits similar to the other firm.…

Q: Explain why a company would shut down in the short run.

A: The shut down point is the point at which a firm decides to seize its operations in the short run…

Q: Why do firms, in the long run, continue to stay in the industry if they are earning 0 profits?

A: Answer - In the long run where the every input can vary and as in the long run where firms can make…

Q: True or False: The industry is in a long-run equilibrium.

A: In the perfectly competitive market structure, every firm in the market produces identical goods and…

Q: Can you name five examples of perfectly competitive markets? Why or why not?

A: Perfect competitive market is a market with large number of buyers and sellers exists and firms are…

Question

If you are a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting, please explain?

Video Video

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

Many films in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
Will a perfectly competitive market display productive efficiency? Why or why not?
If you're a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?
Soft drink industry has been historically profitable why? compare the economies of the concentrate business to the economics of the bottling business. Why do you think the profitability is so different between these businesses?
Fill out the rest of the table what would the highest profit be in this perfectly competitive firm and what would the maximizing output be? is there a breakeven price and if so, what is it?
Can you think of a product that meets at least most of the criteria required for a perfectly competitive market? Which criteria does it fail to meet?
Small “Mom and Pop" firms sometimes exist even though they do not earn economic profits. How can you explain this? Think about what all is covered in economic profit?
Thinking on the Margin to Increase Profitability Have you ever walked into a restaurant for lunch and found it almost empty? Why, you might ask, does the restaurant even bother to stay open? It might seem that the revenue from so few customers could possible cover the cost of running the restaurant. Provide an opinion using the concepts of sunk costs, marginal cost and marginal revenue.
A requirement for a perfectly competitive market is that the sellers sell identical products (consumers don't care who makes the products sold in that market). Think about this from the perspective of the seller. What are the benefits of this? What are the drawbacks?
Can excess profit be earned in this industry in the long run?
you've been learning about what makes a market perfectly competitive, how a firm in a perfectly competitive market makes profit-maximizing decisions, and how a perfectly competitive market moves towards equilibirium. But how applicable is this to real life? For this discussion, try to think of a market (for a product or service) that is perfectly competitive or very close to it. What characteristics of the market make it like perfect competition? Are there factors that keep it from being perfectly competitive? If so, what are they? How close do you think the firms in this market are to perfectly competitive firms in choosing equilibrium price and quantity?
How do you define 'profit'?