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Price and Costs 13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average variable cost. The price of fertilizer must be equal to marginal cost. The price of fertilizer must be less than average total cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. MC Quantity Firm Price Demand Quantity Market If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and Si ▼ indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. ☐ ☐ ☐ Average total cost will increase. The total quantity supplied to the market will increase. The quantity supplied by each firm will increase. The price of fertilizer will decrease. Marginal cost will increase.

Price and Costs 13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average variable cost. The price of fertilizer must be equal to marginal cost. The price of fertilizer must be less than average total cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. MC Quantity Firm Price Demand Quantity Market If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and Si ▼ indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. ☐ ☐ ☐ Average total cost will increase. The total quantity supplied to the market will increase. The quantity supplied by each firm will increase. The price of fertilizer will decrease. Marginal cost will increase.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
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13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average variable cost. The price of fertilizer must be equal to marginal cost. The price of fertilizer must be less than average total cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Price and Costs MC ATC LAVO Firm Quantity Price a Demand If firms in the market are producing output but are currently making economic losses, P Market Quantity illustrates the present situation for the typical firm in the market, and S₁ ▼ indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Average total cost will increase. The total quantity supplied to the market will increase. The quantity supplied by each firm will increase. The price of fertilizer will decrease. Marginal cost will increase.
Transcribed Image Text:13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average variable cost. The price of fertilizer must be equal to marginal cost. The price of fertilizer must be less than average total cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Price and Costs MC ATC LAVO Firm Quantity Price a Demand If firms in the market are producing output but are currently making economic losses, P Market Quantity illustrates the present situation for the typical firm in the market, and S₁ ▼ indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Average total cost will increase. The total quantity supplied to the market will increase. The quantity supplied by each firm will increase. The price of fertilizer will decrease. Marginal cost will increase.
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