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- Consider a profit-maximizing firm in a competitive industry. For each of the following situations, indicate whether the firm should shut down production or produce where MR = MC. a. P < minimum AVC. b. P > minimum ATC. c. Minimum AVC < P < minimum ATC.QUESTION ONEIllustrate and fully discuss the derivation of the demand curve for a pertectly Competitive firm.If the corn industry is perfectly competitive with a market price of $2 per bushel and a corn farmer in the industry charges $4 per bushel, how many bushels would the farmer sell?
- Refer to the above diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is?Assume that apples are produced in a perfectly competitive market. Grande’s Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel. (a) Draw a correctly labeled graph showing Grande’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG . (b) Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grande’s economic profit in the short run? Explain. (c) What will happen to Grande’s economic profit in the long run? Explain.Assume that apples are produced in a perfectly competitive market. Grande’s Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel. (a) Draw a correctly labeled graph showing Grande’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG . (b) Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grande’s economic profit in the short run? Explain. (c) What will happen to Grande’s economic profit in the long run? Explain. BoldItalicUnderline
- Consider a perfectly competitive market for wheat in Toronto. There are 90 firms in the industry, each of which has the cost curves shown on the following graph:You are given the following information for a producer of organic grommets in a perfectly competitive market. TFC = $8 Market price = $13 Quantity MC ($) 1 10 2 8 3 9 4 11 5 14 6 18 The marginal cost of production appears in the table above. What is the profit-maximizing output? Is the firm making a profit or loss? How much?The graph below shows a competitive firm's demand and cost curves. Assume that the firm produces at the profit-maximizing output level. What is the firm's profit? [Recall that in perfect competition a firm’s demand curve is a horizontal line drawn at the market price level and that P=MR=D.] Group of answer choices $144 $720 $576
- Which of the following would not help a firm to improve its competitive position?A firm in a competitive market receives $500 in total revenue and has marginal revenue of $10. What is the average revenue, and how many units were sold? Microeconomics - MankiwShazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands, which sell for $10 each. At this level of output, the marginal cost is $10 and the average variable cost is $12. Should the firm increase output, decrease output, or not produce? Explain why?