In the short run, in a perfect competition market structure, if P>ATC which of the following will occur? Firms will enter the market and price will fall. Firms will exit the market and price will fall. Firms will enter the market and price will rise. Firms will exit the market and price will rise.
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- 30. Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount. 31. If barriers to entry ________ or product differentiation ________, competition in a market will ________. increase; increases; increase increase; decreases; increase decrease; increases; increase decrease; decreases; increase decrease; decreases; decreaseQuestion 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.30) If an individual perfectly competitive firm charges a price above the industry equilibrium price, it willA) not sell any of what it produces.B) sell all that it can produce and gain more revenue than competitors.C) sell all that it can produce and gain equal revenue with competitors.D) sell part of what it can produce and gain less revenue than competitors will.
- Question 1.Suppose the market equilibrium price of wheat is Rs.2 per bushel in a perfectly competitive industry. Draw the industry supply and demand curves and the demand curve for a single wheat farmer. Explain why the wheat farmer is a price tracker31) If P = MC and MC > ATC, then a perfectly competitive firm will earn ________ profits.A) break-even B) positive C) zero D) negativeThe following in formation is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price $5 Total cost $25,000 Marginal cost $4 Total variable cost $20,000 What is the best action for this firm. a) Increase output in the short run and stay in the market the long run b) Increase output in the short run and decrease output in the long run c) Shutdown in the short run and exit in the long run d) shut down in the short run and produce in the long run. e) reduce output in the short run and increase output in the long run
- In a perfectly competitive market, a single firm that sets its price a small amount above the market price will do which of the following? a.Not sell any units at all b.Have lower revenues but receive zero economic profits c.Make lower profits than other firms, but the exact amount less depends on the elasticity of demand for the product d.Earn profits higher than other firms as long as the other firms continued to charge the market priceA firm operates in a perfectly competitive market. Its marginal cost = to its marginal revenue. It is incurring economic losses . Based on this information, which of the following is true? a) An increase in output will decrease the forms economic losses. b) a decrease in output will decrease the firms economic losses. c) Any change in output will fail to result in positive economic profits. d) An increase in price will decrease the firms economic losses. e) the forms marginal revenue exceeds its outputs average total costPlease no written by hand solutions 9. A firm produces a product in a perfectly competitive industry and has a short-run total cost function of SRTC= 50+ 4q+2q. In the short-run, the market equilibrium price is $20 and the firm's profit maximizing quantity is_ Assuming there is no change in cost structure, in the long-run the equilibrium price changes to a. 4; $24 b. 4:$15 c. 5; $24 d. 5:$15 10. The market for sugar consists of 3,500 identical firms, each with the following short-run total cost function: SRTC-1,500+ 35q. The market demand curve for sugar is Q=11,200- 30P. What is each firm's short-run profit? a. So b. $280 c. -$1,080 d. -$1,360 e. -$1,500
- Perfect competition is a theoretical market structure in which the followingcriteria are met: All firms sell an identical product. All firms are price takers.Market share has no influence on prices. Given the characteristics describedabovei. Describe the factors that drive profits to zero in perfectly competitivemarkets in the long run. Explain carefully the incentives that drive themarket to a long run equilibrium. ii. Why would a firm choose to operate at a loss in the short run? iii. When do firms decide to shut down production in the short run?32) Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmerʹs marginal revenue to ________ and their profit-maximizing level of output to ________.A) increase; increase B) increase; decreaseC) decrease; increase D) decrease; decrease32. Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount.
