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- use relevant diagrams as well as microeconomic theory, discuss why competitive firms stay in business if they make zero profit?1.- A company that works in a perfectly competitive market has a total cost function: TC = Q3 - 36Q2 + 540Q + 600 The supply and demand functions in that market are: QS = 5P -500 Qd = 4,000 -10P a) How much should you produce to maximize your profits? b) Find what benefit you will get c) Calculate the closing point for the company d) Represent graphically the market equilibrium and that of the company, including the closing point e) Locate the rectangle that represents profits on the company's equilibrium graph. Calculate your área considering the values taken by the base and the height. Validate that it reaches the same result (or very close) to the one obtained in part b).ANSWER IF TRUE OR FALSE: no need for long explanation. 1. The welfare of the consumers is maximized under a purely competitive market. 2. It is easy to exit or stop production if the market condition is no longer profitable if there is very low investment in fixed assets. 3. Patents and copyrights serve as barriers in entering an industry and in competing against the already existing producers.
- . Agglomeration Economies and Auto Row Chapter 1 uses Auto Row as an example of self-reinforcing changes that lead to extreme outcomes. Consider a city with three isolated automobile dealers, each of which has three buyers per day. The profit per car sold is $1,000. A two-dealer cluster would get six times as many buyers (18), and a three-dealer cluster would get 12 times as many buyers (36). a. Use a graph like Figure 3–2 to show the profit gap (the profit for a firm in a cluster minus the profit for an isolated firm) for one, two, and three dealers. b. If initially all dealers are isolated and then one joins another to form a twodealer cluster, other firms [will, won’t] have an incentive to join the cluster because. . . .8. “Creative destruction” is the process by which:a. Old buildings are demolished and new ones are build in their place.b. Old sources of competitive advantage are displaced by new ones.c. Old skills become obsolete and new ones develop in their place.d. Old technologies are replaced by new ones.A. Explain, how or why the commodity (say bottled water) market can be considered as a good example of perfect competitive market? B. Explain why perfect competitive markets are regarded as the best market structure for the society?
- #4. Agriculture in india is mostly characterized by perfectly competitive market why? Short answer quicklyEconomics Bidding for Bookstore Licenses. Paige initially has the only license to operate a bookstore in Bookville. She charges a price of $13 per book, has an average cost of $3 per book, and sells 1,501 books per year. When Paige's license expires, the city decides to auction two bookstore licenses to the highest bidders. Suppose the relevant variables (price, average cost, and output per firm) take on only integer valueslong dash—no fraction or decimals. a. Suppose Paige is optimistic and imagines the best possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Hint: How will the relevant variables change? What is the smallest possible change in their values?) b. Suppose Paige is pessimistic and imagines the worst possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Enter your response as an integer.)4 The Competitive Equilibrium Model—Deriving Supply] Negar owns a trendy and sustainable shoe factory. The total cost of producing a given number of pairs of shoes is displayed in the table below. Assume Negar can only produce the integer quantities of pairs of shoes specified in the table. Number of pairs Total Cost 0 400 10 410 20 430 30 460 40 500 50 580 60 680 70 800 b. Draw the supply curve for Negar’s shoe factory. c. Suppose the wholesale market for shoes that sell to retail stores is competitive, with a market price of $10 per pair (i.e., $100 per 10 pairs). If Negar’s goal is to maximize profits, how many pairs will she choose to sell? d. What are Negar’s profits when she sells the number of pairs from (c) at the market price of $10? e. Calculate Negar’s producer surplus given the price and quantity from part (c). How does this compare to the profit calculated in part (d)?
- Pic 1 : You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers: Price Adults Children (Dollars) (Tickets) (Tickets) 10 0 0 9 100 0 8 200 0 7 300 0 6 300 0 5 300 100 4 300 200 3 300 200 2 300 200 1 300 200 0 300 200 To maximize profit, you would charge $ ? for an adult's ticket and $ ? for a child's ticket. Total profit in this case would be $ ? The city council passes a law prohibiting you from charging different prices to different customers. Now you set a price of $ ? for all tickets, resulting in $ ? in profit. Pic 2 : Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.…2. If pure competition is not an adequate representation of the economic model that underlies farming in the Philippines, why do the assumptions of pure competition continue to be important to agricultural economists?(11) Capital is a factor of production that has been produced for use in the production of other goods and services. Which of the following is an example of capital? Select one: a. money b. airports c. lumber (12) Which of the following are conditions of perfect competition? Select one: a. All firms sell identical products. b. There are few buyers and sellers c. Consumers have little relevant information to make rational buying decisions.
