What is the profit maximizing level of output for the firm? b.What is the economic profit earned or loss incurred by the firm? c. Based on your answers of (a) & (b) determine what should be the firms decision regarding exit in the long run. Explain your answer.

What is the profit maximizing level of output for the firm? b.What is the economic profit earned or loss incurred by the firm? c. Based on your answers of (a) & (b) determine what should be the firms decision regarding exit in the long run. Explain your answer.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 15RQ: What prevents a perfectly competitive firm from seeking higher profits by increasing the price that...

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Question

100%

a.What is the profit maximizing level of output for the firm?

b.What is the economic profit earned or loss incurred by the firm?

c. Based on your answers of (a) & (b) determine what should be the firms decision regarding exit in the long run. Explain your answer.

2. The diagram below shows a perfectly competitive firm. Use the diagram to answer the following
questions.
MC
ATC
AVC
23
22
16
MR
12
11
14
17 19
Quantity (units)
Price (dollars per unit)

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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