If you know that the market price for a perfectly competitive firm is 10 Dirhams and the average total cost for this firm -5 dirhamds and the quantity of the maximum profit for this company is- 100 units and the profit/loss (market price - average total cost) x quantity of maximum profit 1- calculate the amount of profit or loss this company has 2- do you advise the company to continue in the market or to shut down the business?

If you know that the market price for a perfectly competitive firm is 10 Dirhams and the average total cost for this firm -5 dirhamds and the quantity of the maximum profit for this company is- 100 units and the profit/loss (market price - average total cost) x quantity of maximum profit 1- calculate the amount of profit or loss this company has 2- do you advise the company to continue in the market or to shut down the business?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 2.4P

See similar textbooks

Similar questions

What prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?
Finding a life partner is a complicated process that may take many years. It is hard to think of this process as being part of a very complex market, with a demand and a supply for partners. Think about how this market works and some of its characteristics, such as search costs. Would you consider it a perfectly competitive market?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
A single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How small is small?
How does a perfectly competitive film calculate total revenue?