Ms. Olivia operates a business in a competitive market. The current market price $9.00. At her profit-maximizing level of production, the average variable cost is $10.00. Ms. Olivia should A. Shut down his business in the short run. B. Continue to operate in the short run.

Ms. Olivia operates a business in a competitive market. The current market price $9.00. At her profit-maximizing level of production, the average variable cost is $10.00. Ms. Olivia should A. Shut down his business in the short run. B. Continue to operate in the short run.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 7MC

See similar textbooks

Related questions

Q: Explain how each of the following will affect aggregate demand. In each case, draw a diagram to show…

A: Answer: (c). If the government passes legislation that increases the rate of corporate taxes then…

Q: Consider the market for sneakers. The domestic demand equation is given by P=20−0.6QP=20−0.6Q, and…

A: Given; Domestic Demand; P=20-0.6Q Domestic supply; P=Q-10 At no-trade equilibrium:-…

Q: Explain the craft union model, industrial union model, and demand enhancement model. Give examples…

A: Unions are groups of employees from similar areas that band together to promote the common good of…

Q: For a firm in a perfectly competitive market, the price of the good is always A. Equal to marginal…

A: There are many buyers and sellers in a competitive market structure . Firms are free to enter or…

Q: There are two countries in the world: Happytimes and Treehausland. Both countries currently have a…

A: Happytimes's GDP = Current GDP(1 + Growth rate)^15 = 1*(1 + 0.086)^15…

Q: Answer the next question(s) on the basis of the following cost data. Notice that fixed cost is $24.…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 4) In the Solow model, suppose that Y AKO.5N0.5, N grows at 2% per year, A=1, the depreciation rate…

A: The percentage changes in a variable over a certain time period are referred to as growth rates.…

Q: The article discussed the potential of Iraq as a major oil supplier. Draw a hypothetical demand and…

A: The markets are the place where the buyers of various different goods and services tend to meet and…

Q: 17. There are two firms selling smartphones (oligopoly market), Firm A and Firm B. Each can set…

A: We have 2×2 prive game between two players.

Q: Assume that you buy a 1-year, 210,000-peso Philippine bond that pays 7 percent when the exchange…

Q: T-ACCOUNT FIRST BANK OF CALIFORNIA Assets Liabilities Reserves $ 500 Deposits $50,000 Government…

A: Given T account

Q: What effect do supply and demand have on the price of a good or service? How do the costs of doing…

A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…

Q: rights refer to the range of laws, rules, and regulations that define rights for the use and…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

Q: Suppose Atlanta imposes a rent control program that fixes rents at $300 below the equilibrium rent.…

A: Equilibrium rent Equilibrium rent is the rental price that is set in the economy where the demand…

Q: 3. Explain the macroeconomic policy debate using AD-AS Diagram.<

A: Macroeconomic policy disputes usually center on fluctuations in the economy's important aggregate…

Q: 6, Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP? C=1,000 +…

A: Answer; The equilibrium GDP is $19250

Q: Q2/choose the right answer 1- I _work very hard because I have an exam next week. A) am having B)…

A: 1. The answer is - D) have to Hence, I have to work very hard because i have an exam next…

Q: A firm operating in a competitive market will stay in business in the short run so long as A. Market…

A: Average total cost is the sum of average Fixed cost and average variable cost. Firms tend to earn…

Q: What amount would have to be invested at a simple interest rate of 2.85% to grow to $2529.28 in 150…

Q: 9. Two firms compete by choosing price. Their demand functions are q1 = 20 - pi + P2 and q2 = 20 –…

A: Given:- Demand function for firm 1: q1=20-p1+p2Demand function for firm 2: q2=20-p2+p1Marginal…

Q: 2 Compute how much ench of the following items is worth in terms of today's dollars ming 256 as the…

A: Since you have posted multiple questions, we will solve first question for you. If you want any…

Q: What is a multinational (MNC)? benefits MNCS can obtain from their operations in developing…

A: Hi! Thank you for the question As per the honor code, We’ll answer the first question since the…

Q: Suppose the elasticity of demand equals -0.5. If a company decreases prices by 10%, quantity…

A: Elasticity of demand measures the responsiveness of quantity demanded to changes in price level.

Q: 5. Suppose the market is perfectly competitive. The market equilibrium market price P = $20. A…

Q: In your own words, please define the following terms: asset, balance sheet, credit risk, excess…

A: Asset: An asset is a financial asset from which the economic owner can derive a benefit or series of…

Q: An equipment costs P10,000 with a salvage value of P500 at the end of 10 years. Calculate the annual…

A: Annual depreciation is defined as the standard yearly rate at which depreciation is charged to a…

Q: Which of the following is NOT a principal-agent problem with foreign aid? recipients usually have…

A: The principal-agent dilemma basically refers to a type of conflict in priorities between a person…

Q: For each of the regions listed in the following table, use the midpoint method to identify if the…

A: The correct answer is given in the second step.

Q: 3) Suppose the profits for two firms is given below in the payoff matrix based on whether they offer…

A: Dominant strategy is a strategy that gives maximum payoff to a player irrespective of what other…

Q: Production Possibilities Frontier (Ch. 2) Computers D B PPF₁ PPF₂ Bread (1) Economic growth in this…

Q: Taxable Income Total Tax $1000 $500 $2000 $600 $3000 $700 $4000 $800 $5000 $900 $6000 $1000 Refer to…

A: Answer; Option (b) is Correct answer

Q: The demand and supply of some good are as follows: Qd = 100 - P Qs =…

A: Eq price and quantity are found by the intersection of dd(demand) and ss(supply) in the market.

Q: Mr. Jones borrowed P 20,000 from a lending firm and an additional P 5,000 after 2 months. He paid P…

A: In this question:- Mr Jones borrowed P 20,000 and P 5,000 after 2 month Here interest rate is 12%…

Q: (c) The Bank of England has a target of keeping inflation at 2%. Central banks around the world that…

A: Since you have asked multiple question , we will solve the first question for you . If you want any…

Q: Consider the AS/AD model. The AS curve is: Y, = a – bm(r, - 7) and the AD curve is: T = T-1 + vY,…

A: Given information Y¯=α ¯-b¯m¯(π-π)¯π=πt-1+v¯Y¯+ο¯α ¯=0.04b¯=0.05m¯=0.04v¯=0.01ο¯=0.02

Q: (Table: Willingness to Pay) Refer to the table. If the firm increase by how much relative to setting…

A: Given the John's willingness to pay for good A = $90 Mary's willingness to pay for good B = $35…

Q: Table 1. Costs of a Restaurant Quantity Total of meals Cost made (Q) 10 1 2 29.0 3 30.5 4 5678 Fixed…

A: Fixed cost and variable cost together make up for total cost

Q: A soap company sold 250,000 soaps for which the variable cost of manufacture was $4.20 per soap.…

A: The answer is as follows:-

Q: Water is produced and sold by the government. Demand for water is represented by the linear…

Q: 1. Consider the following normal-form game: L C R U 5, 10 | 5, 3 | 3,4 м 1,4 7, 2 7,6 N 4, 2 8, 4…

A: As given 4×3 game player 1 has 4 strategy U, M, N, D and player 2 has 3 strategy L, C and R.

Q: Assume the market of non-medical masks can be described by the following equations: Demand: QD= 20 -…

A: Market equilibrium is that condition where market Demand is equal to market supply.

Q: Labor force participation rates have been falling from most (though not all) segments of the working…

A: Labor Force refers to the portion of the population who are employed or unemployed but willing and…

Q: Many schemes for price discrimination involve some cost. For example, discount coupons take up the…

A: Monopoly may be a situation where there's one vender within the market. In conventional economic…

Q: 3. A factory is constructed at a first cost of P8,000,000 and with an estimated salvage value of…

A: The sinking fund method is a depreciation method for financing the replacement of an asset after its…

Q: Final income 45° Original Income Figure 6: Welfare policy diagram Towards the right of Figure 6 are…

A: Government intervention, in the form of taxes and subsidies, affects household income. In general,…

Q: A firm must decide between two designs. Their effective income tax rate is 15%, and MACRS…

A: The annual worth or AW method refers to the value for an alternative, comprising of two prime…

Q: Fill in the blank: An economy is in a recession if ____________ falls over two quarters (six…

A: Recession is a stoppage or a gigantic constriction in economic exercises. A critical fall in…

Q: Suppose the firm faces a price of $44, an average variable cost of $34, and has an average fixed…

A: Solution:- Option B- can cover all its costs. and option C- and will have a profit per unit of $5.

Q: According to the Descartes' rule, the number of positive i* value for the following cash flow is:…

A: Descartes' rule of signs is used for the determination of the number of real zeros in a polynomial…

Q: Which of the following statements best describes the game played by the employer and the employee in…

A: Labor Discipline Model is given by Bowles.

Question

My answer was wrong can I be shown explained what the right answer is?

Ms. Olivia operates a business in a competitive market. The current market price is
$9.00. At her profit-maximizing level of production, the average variable cost is
$10.00. Ms. Olivia should
A. Shut down his business in the short run.
B. Continue to operate in the short run.
C. Shut down his business in the long run.
D. He should completely exit the market in the market.

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

A breakfast place, a perfectly competitive eatery, sells its special for $5. Cost of waiters, cooks, and power average out to $3.95 per meal; cost of lease, insurance and other expenses average out to $1.25 per meal. What should this owner do. A)close her doors immediately b)continue producing in the short and long run c)continue producing in the short run, but plan to go out of business in the long run if price does not increase in the future d)raise her prices above the perfectly competitive level e)lower her output
Doug's Donut Shop operates in a competitive market and is currently producing 200 donuts. He has average revenue of $1.50, his average total cost is $1, and his total fixed costs are $30. Does Doug have profits or losses?Select one:a. losses of $300.b. losses of $100.c. profits of $200.d. profits of $100.
In the long run, firms in a competitive marketA.earn positive accounting profit, but zero economic profit.B.earn zero accounting profit and zero economic profit.C.shut down because their accounting profit goes to zero.D.earn negative accounting profit, but positive economic profit.
Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.
(Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn? a profit of $200 a loss of $30 T a loss of $200 a profit of $80 This is what I think the answeris
Show the competitive firm in long run equilibrium and describe productive and allocative efficiency. Demonstrate what happens to equilibrium price and quantity with an increase in market demand. Can the firm make economic profit in the short run? What about the long run?
3 examples of perfectly competitive markets and dose these firms profit in long run or short run
a. A firm operating in a perfectly competitive market is earning K20 million economic profits. What is the firms accounting profits if the opportunity cost is K30 millionb. What will be the firm’s economic profits in the long run? c. Company ‘A’ has been recording accounting profits averaging K50 million by investing in project C. It could earn K60 million and K70 million in projects D and E, respectively. What is the company’s current economic profit? d. Advise management what to do in the long run e. Project ‘B’ has a net present value of zero after applying a discount rate of 10%, which is the risk adjusted required rate of return that takes into account the riskiness of the project. What return is earned on this project f. After a risk assessment, it is discovered that project ‘B’ has become more risky and the risk adjusted required return to use must be 12%. Will the net present value of project ‘B’ still remain zero?
Draw the short-run ATC, AVC, MC, MR and Demand graphs for a perfectly competitive market experiencing a profit. In each part, show Total Cost (TC), Total Revenue (TR), shade the profit. Clearly label Q for the equilibrium quantity point and P for market price point.
A firm collect $300 by selling 5 bicycle and collect $330 by selling 6 bicycle. Is this seller in a perfectly competitive market?
a. Draw the marginal cost and average total cost curves for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do. b. Does a competitive firm’s price equal its marginal cost in the short run, in the long run, or both? Explain.
Here are three fictional restaurants and their costs and revenues during March of 2020: Restaurant Fixed Costs Variable Costs Pandemic Revenues The Peach Pit 110,000 85,000 80,000 Gus' Galaxy Grill 75,000 75,000 100,000 Paddy's Irish Pub 50,000 70,000 95,000 a) For each restaurant, calculate their profits during this difficult month. b) Which restaurant, if any, earned a profit? c) Which restaurants were able to remain in business in the short run? Which were forced to shut down entirely? Why?