Perfectly competitive firms can incur economic losses in the short run. If you are not sure about the answer and do not want to guess, choose the "Unsure" option. You will neither receive marks for the question nor will you lose marks for choo ng this option. True O False Unsure M P
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- Now suppose firm X undertakes a process innovation that reduces its marginal cost ofproduction from $20 to $15. The fixed cost of undertaking this process innovation is F > 0. Is this atough commitment or a soft commitment? Why? For what values of F would it make sense for firm Xto make this commitment?A Milton company works in perfect competition market, its total cost curve in short run isgiven in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that averagerevenue is $10.b. What is the firm profit at this level of output?What happens when a company doesn't follow economic thoery and charges pries below the marginal revenue point? Or doesn't realize the economies of scale?
- Suppose a perfectly competitive firm is operating in short run. The information of MR, Q,ATC and AVC are 15 taka, 60 unit, 45taka and 35 taka respectively. Calculate firm’sprofit/loss and total fixed cost. From these calculations and based on all the giveninformation, can you conclude about the firm’s decision in short run? Explain your reasoningwith the help of a suitable diagram. Show all the relevant information in yourdiagram.[Q=profit maximizing output and MR=marginal revenue]A market is in long-run equilibrium and firms in this market have identical cost structures suppose demand in this market decreases. Which of the folowing are coreet descriptors of what happens to tho individual firms and the whole market as the market fist leaves and then returns to long-run equilibrium? Instructions: You may select more than one answer cick the box with a check mark for correct answers and dick to empty the box for the wrong answers. 0 Market proe will decrease in the longrun. O Market quantity will remain the same in the long-run. O Individual firms' profit maximizing output will decrease in the long run. O Firms will exit the market inthe long run. O Individual firms' profit maximizing output wil decrease in the shon-nun. O Market quantity decrease in the long run. o Firms win enter into the market in the long run. O Market price wil decrease in the short-run. References eBook & Resources Leaming objective: 13-08 Calculato the Section Responding…An ice cream producer has fixed costs of $70,000 per month, and it can produce up to 15,000 ice cream tubs per month. Each tub costs $10 in the market whilethe producer faces variable costs of $3 per tub.a. What is the economic breakeven level of production?b . Calculate the ice cream producer’s monthly profits at full capacity. What would happen to the monthly profits if another ice cream producer entered themarket, driving the price of ice cream tubs down to $7 per unit?
- A perfect competitive firm estimates her cost function as given below: C = 100 + 5Q2a. What is the firm’s fixed and marginal cost?b. If all other firms in the market sell the product at a price ¢20. How much should thisfirm charge for the product?c. What is the optimal level of output to maximize profits?d. How much profit will be earned?e. In the long run should this firm continue to produce or shut down? Why. In a perfectly competitive market there is a donut shop that sells 1,200 donuts daily. Each donut sells for the market price of $0.75 and they sell out every day. Assume that this company has labor costs of $275 and materials costs of $400. a. Using only variable costs, what is the donut shop’s daily profit? - Now assume that the owner is thinking of adding a second location downtown. The capital investment required is $4,000 (Sunk Cost). The $4000 is Sunk Cost. The normal rate of return is 5%. b. If the new shop could operate under the same conditions as the original location is it a good business decision to expand? c. What would be the new shop’s daily profit?“Even if a firm is losing money, it may be better to stay in business in the short run.” Is this statement ever true? Under what condition(s)?
- A Milton company works in perfect competition market, its total cost curve in short run is given in this function: TC = 200 − 4Q + 0.5Q2 a. What output level should the firm produce to maximize profit? knowing that averagerevenue is $10. b. What is the firm profit at this level of output?>>>>>>>>>>>>>>>>>>>>>>>>>>>>Suppose the production function for high quality brandy is given by : Q = √KLWhere q is the output of brandy per week and L is labor hours per week ., in the short run K is fixed at 100, so the short run production function is Q = 10√L a. If the capital rents for 10$ and the wage are 5$per hour ., write the short run total cost function. b. How much will the firm produce at a price of 20$ per bottles of brandy ? c. How many labor hours will be hired per week?…In the short-run, if the marginal cost of a firm in a competitive industry is upward sloping while itsaverage variable cost is downward sloping, what can you say about slope of average total cost?Given the data provided in the table below, what is the marginal cost of producing the 4th unit of output? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45 Question 12 options: a) $4.00 b) $19.00 c) $4.75 d) $5.00