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Under what circumstances might you expect the
a. Vertical?
b. Horizontal?
c. Negatively sloping?
d. Positively sloping?
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- What two lines determine whether a firm is making positive or negative or zero profits?What is meant by a competitive firm? Explain the difference between a firm’s revenue and its profit. Which do firms maximize?“That segment of a competitive firm’s marginal-cost curve that lies above its average-variable-cost curve constitutes the shortrun supply curve for the firm.” Explain using a graph and words.
- Why are firms called price takers in a perfectly competitive market? Why do different firms produce different quantities despite having the same price and MR curve in perfect competition? Explain. give graphs if neededEconomics Suppose you are the production manager of a small perfectly competitive firm making a single product. (i) Explain whether each of the following factors does or does not affect the profit-maximizing level of output your perfectly competitive firm makes. (ii) Is your answer different in the short run compared to the long run? Explain why/how. a. Rent for the firm’s space increases. (graph required) b. Health insurance premiums paid by the employer increase (graph required).For the pizza seller whose marginal, average variable, and average total cost curves are shown below. a. What is the profit maximizing level of output and profit of this firm if the price of pizza is $3.50? b. Below what price will this firm shut-down in the short-run? c. If the price was $4.50, what would this firm's profit be?
- (c) If the rent of the building the firm occupies increases, what will happen to the firm’s profit-maximizing quantity of hats in the short run? Explain.Derive the supply function from the firm theory. Do not use numbers. Just graphs and detailed explanations.The table above shows the total cost function for a typical firm producing hats in a perfectly competitive market. The market price for hats is $9 per hat. (a) Calculate the average variable cost of the fifth unit. Show your work. (b) What is the firm’s profit-maximizing quantity of hats? Explain using marginal analysis. (c) If the rent of the building the firm occupies increases, what will happen to the firm’s profit-maximizing quantity of hats in the short run? Explain. (d) Draw a correctly labeled graph showing the firm’s demand and marginal cost curves, and show the profit-maximizing quantity of hats, labeled Q*.
