Tom's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo. The market price of a portrait is $65.00. The table shows Tom's total costs. How many portraits does Tom sell in an hour and what is Tom's economic profit in the short run? Tom's Family Photos sells 5 portraits an hour. In the short run, Tom's an hour. of makes an economic profit incurs an economic loss Quantity (portraits per hour) 0 1 2 3456 Total cos (dollars per he 50 100 130 170 220 280 350

Tom's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo. The market price of a portrait is $65.00. The table shows Tom's total costs. How many portraits does Tom sell in an hour and what is Tom's economic profit in the short run? Tom's Family Photos sells 5 portraits an hour. In the short run, Tom's an hour. of makes an economic profit incurs an economic loss Quantity (portraits per hour) 0 1 2 3456 Total cos (dollars per he 50 100 130 170 220 280 350

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product?
What price will a perfectly competitive firm end up charging up the long run? Why?
What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
Finding a life partner is a complicated process that may take many years. It is hard to think of this process as being part of a very complex market, with a demand and a supply for partners. Think about how this market works and some of its characteristics, such as search costs. Would you consider it a perfectly competitive market?
Emma sells hand-made shawls in a perfectly competitive market for £18 per shawl. Emma’s fixed costs are £10, and she is capable of producing up to 6 shawls per week. (8%) Use that information to fill in the table Quantit y Total Revenu e Fixed Cost Variable Cost Total Cost Profit= Revenue – Total Cost Marginal Revenue Margina l Cost 0 0 10 --- --- 1 18 8 2 12 3 18 4 27 5 39 6 52 What quantity of shawls should Emma produce in order to maximize her profit? At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?
Assume hotdog stands in New York are in a perfectly competitive market. Jacob is taking over a hot dog stand from his uncle. Let’s say initially it is the only hotdog stand in three blocks. Currently he charges a price of $5 a hotdog and sell about 100 hotdogs every day. His uncle left to cart to him, but he still has to pay a $18,250 a year for an inspection and permit (think this as rent). For 100 dogs, it costs him $100 a day in ingredients and $50 a day in propane to grill. What is Jacob’s average fixed cost (per day)? What is his variable cost (per day)? And finally, what is his average total cost (per day)? In side-by-side graphs please illustrate what the market for hotdogs looks like as a whole and for your individual stand. Be sure to label everything. c. How much profit are you earning? Calculate it and show it on the graph. d. Now imagine, others are realizing Jacob’s success and start filling up the empty street corners with their hotdogs. In a new…
Assume hotdog stands in New York are in a perfectly competitive market. Jacob is taking over a hot dog stand from his uncle. Let’s say initially it is the only hotdog stand in three blocks. Currently he charges a price of $5 a hotdog and sell about 100 hotdogs every day. His uncle left to cart to him, but he still has to pay a $18,250 a year for an inspection and permit (think this as rent). For 100 dogs, it costs him $100 a day in ingredients and $50 a day in propane to grill. a. What is Jacob’s average fixed cost (per day)? What is his variable cost (per day)? And finally, what is his average total cost (per day)? b. In side-by-side graphs please illustrate what the market for hotdogs looks like as a whole and for your individual stand. Be sure to label everything. c. How much profit are you earning? Calculate it and show it on the graph. d. Now imagine, others are realizing Jacob’s success and start filling up the empty street corners with their hotdogs. In a new side-by-side graph…
Q2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves. Figure 2: Market for Burger (a) What is Perfect Competition? (b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes. (d) With no change in demand or technology, how will the price change in the long run? (e) Distinguish between technological efficiency and economic efficiency.