Price is $6. A firm is producing the output level at which average total cost equals marginal cost, both of which are $8. Average variable cost is $4. To maximize its profits in the short run, the firm should a. Decrease its output. b. Expand its output. C. Leave its output unchanged. d. Shut down.
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- Fill in with the correct answer. Your firm has a price of $5, an average total cost of $7, and an average variable cost of $4. Inthe short run, you should__________ (operate/shut down) because ________exceeds___________. Inthe long run, you should ___________(stay in/exit) the market because________ exceeds___________.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.For a burger seller Marginal, average variable and average total cost curves are attached below: 1. what is profit maximizing level of output and profit of this firm if the price of burger is $3.50? 2. Below what price will this firm shut down in the short run? 3. If the price was $4.50 ehat would be the firm's profit?
- A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $150. Marginal cost curve intersects the average total cost curve at $200. Marginal cost curve intersects the marginal revenue curve at $170. At Q = 100, ATC = $210 and AVC = $155 At this output of Q = 100, calculate: total revenue (TR), total cost (TC), variable cost (VC), and fixed cost (FC). Show your work (formulas and calculations)A foodstuff firm has variable cost function: VC = 2q(q+1). The foodstuff market isconsidered as perfect competition market with many firms that are doing business.a. Find the short run supply curve of the firm?b. The firm is break even at total revenue of $702. Calculate the firm’s price and output atthis break-even point?c. What is the firm’s fixed cost?d. Calculate the price at which firm will shut-down its business?26) The short run supply curve of a firm is a) marginal cost curve b) average total cost curve c) average variable cost curve d) marginal revenue curve
- 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?When are you are you expecting companies to produce in the short run?A. costs equal equal revenueB. price equals marginal revenueC. Average costs equal marginal costsD.marginal revenue equals marginal costA perfectly competitive firm faces the short-run cost schedule shown in Table Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. If the firm is typical of other firms, what price will it charge in the long run? Explain.
- At current output a perfectly competitive firm finds that Marginal Revenue (MR) = 80 , Marginal Cost (MC=80), Average Variable Cost (AVC)=40, Average Total Cost (ATC)=75, quantity (Q)=100. In the long-run, what will happen to the number of firms in the industry, industry output, market price, and the output of a typical firm? Explain. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.in the short run firms in perfect competition will still produce provided the: 1. price covers fixed costs 2. price covers variable costs 3. the price covers average fixed costs 4. the price covers average variable costWhen a perfectly competitive firm increases thequantity it produces and sells by 10 percent, itsmarginal revenue _________ and its total revenuerises by _________.a. falls; less than 10 percentb. falls; exactly 10 percentc. stays the same; less than 10 percentd. stays the same; exactly 10 percent