In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to _(40). This will corresponds to the minimum of the |(41) profits. The process will continue until the market equilibrium price _(42) function. 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost

In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to _(40). This will corresponds to the minimum of the |(41) profits. The process will continue until the market equilibrium price _(42) function. 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 5CQ

See similar textbooks

Similar questions

A perfectly competitive firm is producing the profit-maximizing output level when their variable cost increases. If the market price does not change, to maximize profit, the firm will need to ________. Group of answer choices increase production maintain the current output level decrease production increase production by the amount of the variable cost increase
consider the market for corn in August 2020, a period where grain prices were quite low and the market for corn was in a short-run equilibrium. Draw a graph that shows supply and demand analysis for corn in August 2020 (put P on the vertical axis and Q on the horizontal axis). This graph will serve as a starting point for your analysis in Questions 2 and 3.In drawing this graph, please assume that the demand curve is downward sloping and supply curve is upward sloping Clearly show the market equilibrium in August 2020. Label the supply curve as S0; demand curve as D0; the equilibrium price as P0; and equilibrium quantity as Q0.
Consider a competitive market in which the market demand for the product is expressed as P = 75 ‑ 1.5Q, and the supply of the product is expressed as P = 25 + 0.50Q. Price, P, is in dollars per unit sold, and Q represents rate of production and sales in hundreds of units per day. The typical firm in this market has a marginal cost of MC = 2.5 + 10q. Determine the equilibrium market price and rate of sales (output). Show your working. Determine the rate of sales (output) of the typical firm, given your answer to part (i) above. If the market demand were to increase to P = 100 ‑ 1.5Q, what would the new price and rate of sales in the market be? What would the new rate of sales (output) for the typical firm be?. Show your working If the original supply and demand represented a long‑run equilibrium condition in the market, would the new equilibrium (iii) represent a new long‑run equilibrium for the typical firm? Explain
Please answer the correct answer ASAP please calculation please Don't answer by pen paper please ASAP The market for bananas is also perfectly competitive. Each banana-growing firm has cost function C(Q)=145+ 20Q+0.75Q2. The aggregate demand for bananas is 1500-2P. Find the long-run aggregate quantity of bananas sold in this market.
A firm operates in a perfectly competitive market. The market price of its product is 4 birr and the total cost function is given by TC= 1/3 Q3 - 5Q2+20Q + 50, where TC is the total cost and Q is the level of output.a) What level of output should the firm produce to maximize its profit?b) Determine the level of profit at equilibrium.c) What minimum price is required by the firm to stay in the market?
There are currently N identical firms in a market. If it is a perfectly competitive market, the short-run market supply curve at any given price is N plus the supply of an individual firm. N times the supply of an individual firm. N - 1 times the supply of an individual firm. It cannot be determined from the information provided
In the perfectly competitive market, if a single producer increases or decreases production while the other competitive companies remain constant, the effect on the total supply and on the market price is significant. True or false
Improved robot technology was recently incorporated into the process of producing automobiles. What will happen in the market for automobiles in the short-run?Answer questions E and F based on the situation: _____ E) Which of the following changes will occur: a) Demand will increase b) Demand will decrease c) Supply will increase d) Supply will decrease _____ F) Which of the following changes will occur: a) Equilibrium price will increase and the equilibrium quantity will increase b) Equilibrium price will decrease and the equilibrium quantity will decrease c) Equilibrium price will decrease and the equilibrium quantity will increase d) Equilibrium price will increase and the equilibrium quantity will decrease
Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196.a) Find the minimum efficient scale of the typical firm.b) Find the long run equilibrium price.Suppose demand in this industry is Qd = 1,700 – 10P.c) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run.Suppose government introduces a $10 per unit tax collected from sellers.d) The tax alters the long run total cost of the typical firm. In which way?e) Does the tax affect the minimum efficient scale of the typical firm?f) In the long run, by how much will the equilibrium price increase in response to the tax?g) Once the market has reached its long run equilibrium, how much revenue does the tax collect in each period of time? How muchConsumer Surplus is lost due to the tax?
Improved robot technology was recently incorporated into the process of producing automobiles. What will happen in the market for automobiles in the short-run? Answer questions 14 and 15 based on the situation: _____ 14) Which of the following changes will occur: a) Demand will increase b) Demand will decrease c) Supply will increase d) Supply will decrease _____ 15) Which of the following changes will occur: a) Equiibrium price will increae and equilibrium quantity will increase b) Equiibrium price will decrease and equilibrium quantity will decrease c) Equiibrium price will decrease and equilibrium quantity will increase d) Equiibrium price will increase and equilibrium quantity will decrease
Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196. a) Find the minimum efficient scale of the typical firm. Find the long run equilibrium price. Suppose demand in this industry is Qd = 1,700 – 10P. b) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run. Suppose government introduces a $10 per unit tax collected from sellers. c) The tax alters the long run total cost of the typical firm. In which way? Does the tax affect the minimum efficient scale of the typical firm? In the long run, by how much will the equilibrium price increase in response to the tax? Once the market has reached its long run equilibrium, how much revenue does the tax collect in each period of time? How much Consumer Surplus is lost due to the tax?
Consider an individual firm operating in a perfectly competitive market. Suppose there is an increase in industry supply caused by new firms entering the market. As a result, an individual firm that is currently earning positive profits will see its profits a. impossible to determine. b.increase. c.decrease. d.not change. Consider a perfectly competitive market. Suppose you observe that there aren't any new firms entering the industry, and the current firms are not exiting the industry. You conclude that firms in the market are a.suffering an economic loss. b.earning an accounting profit. c.breaking even. d.earning an economic profit.