When are firms likely to enter an industry? When are they likely to exit?OA. Firms will exit an industry when price is greater than the minimum point on the average total cost curve, and firms will enter an industry when price is less than the minimum point on the average total cost curveOB Accounting profits attract firms to enter an industry, and accounting losses cause firms to exit an industryrage variable cost curveOC. Firms will exit an industry when price is less than the minimum point on the average variable cost curve, and firms will enter an industry when price is greater than the minimum pointOD. Firms will enter an industry when price equals marginal cost, but firms will exit an industry when price does not equal marginal costOE. Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry.

Economic profit refers to the difference between the total revenue derived from the sales of a good…

When are firms likely to enter an industry OA Fims will exit an industry when price is greater than the minimum point on the average total cost curve, and firms will enter an industry when price is less than the minimum point on the average to curve OB Accounting profits attract firms to enter an industry, and accounting losses cause firms to exit an industry OC. Fims will exit an industry when price is less than the minimum point on the average variable cost curve, and firms will enter an industry when price is greater than the menum point on the average rat OD. Fims will enter an industry when price equals marginal cost, but firms will exit an industry when price does not equal marginal cost OE Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry DE SUPR

When are firms likely to enter an industry OA Fims will exit an industry when price is greater than the minimum point on the average total cost curve, and firms will enter an industry when price is less than the minimum point on the average to curve OB Accounting profits attract firms to enter an industry, and accounting losses cause firms to exit an industry OC. Fims will exit an industry when price is less than the minimum point on the average variable cost curve, and firms will enter an industry when price is greater than the menum point on the average rat OD. Fims will enter an industry when price equals marginal cost, but firms will exit an industry when price does not equal marginal cost OE Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry DE SUPR

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 8PA

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Similar questions

A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Question 3 The current market price in a competitive industry is $15. Every firm in the industry operates a technology that implies costs described by the function C = 12.5 + 0.3Q2. In the future, the technology is expected to change, and the new cost function will then be C = 10 + 0.2Q2. How much profit is the typical firm making today and in the long run? O. Profit is zero both today and in the long run. O. Profit is 125 both today and in the long run. O. Profit is 175 today and zero in the long run. O. Profit is 250 today and 125 in the long run.
Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2 i. Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm. ii. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication. iii. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.
Kasey Puzzle, Inc. sells geography-based puzzles. Kasey currently sells 25,000 units a month for $40 each, has variable costs of $20 per unit, and fixed costs of $300,000. Kasey Puzzle is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Kasey Puzzle increase the price of its product? с Multiple Choice O O Yes, profit will increase $500,000. No, profit will decrease $500,000. No, profit will decrease $300,000. Yes; profit will increase $300,000.
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 1/2q2 Marginal cost: MC = q Where q is an individual firm’s quantity produced. The market demand curve for the product is: Demand: QD = 120 – P Where P is the price and Q is the total quantity of the good. Currently there are 9 firms in the market. What is each firm’s fixed cost? What is its variable cost? Give the equation for average total cost. Graph the average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is the average-total-cost curve at its minimum? What is the marginal cost and average total cost at that quantity? Give the equation for each firm’s supply curve. Give the equation for the market supply curve for the short run in which the number of firms is fixed. What is the equilibrium price and quantity for the market in the short run? In this equilibrium, how much does each firm produce? Calculate the firm’s profit and loss. Do firms have…
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 −PThere are 9 firms in the market.a) What are each firm’s: fixed cost, variable cost, marginal cost, and average total cost? Graph the average-total-cost curve and the marginal-cost curve.b) Give the equation for each firm’s supply curve.the average-total-cost curve at its minimum? What is marginal cost and average totalc) Give the equation for the market supply curve for the short run in which the numbercost at that quantity?
21. A long-run equilibrium in an industry exists when cost per unit is at its lowest possible level. O. there is only one firm in the industry. O. the size of the market remains constant. O. price equals cost per unit. O. price equals marginal cost. 22. A tariff imposed on a country as a penalty for dumping goods is called a(n) O. antidumping duty. O. quota tariff. O. ad valorem tariff. O. revenue tariff. O. dumping duty.
1. Assume the market for coffee mugs is perfectly competitive. Firms in themarket are producing output, but are currently making economic losses. a. How does the price of coffee mugs compare to the average total cost, the averagevariable cost, and the marginal cost of producing coffee mugs?b. Draw two graphs, side by side, illustrating the present situation for the typical firm andin the market.c. Assuming there is no change in either market demand or the firms’ cost curves,explain what will happen in the long run to the price of coffee mugs, marginal cost,average total cost, the quantity supplied by each firm, and the total quantity supplied tothe market.
Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand curve for this product is Demand: QD = 120 – P where P is the price and Q is the total quantity of the good.Currently, there are 9 firms in the market. a. What is each firm’s fixed cost? What is its variable cost?Give the equation for average total cost. b. Graph average total cost curve and the marginal cost curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…
The production of plastic bags characterized by high fixed costs and low marginal costs. As a result, we would expect (relatively) O Few small firms in this market O Many large firms in this market O Many small firms in this market O Few large firms in this market
The market for fertilizer is perfectly competitive.Firms in the market are producing output but arecurrently incurring economic losses.a. How does the price of fertilizer compare to theaverage total cost, the average variable cost, andthe marginal cost of producing fertilizer?b. Draw two graphs, side by side, illustrating thepresent situation for the typical firm and for themarket.c. Assuming there is no change in either demand orthe firms’ cost curves, explain what will happenin the long run to the price of fertilizer, marginalcost, average total cost, the quantity supplied byeach firm, and the total quantity supplied to themarket.
Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2i. Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm.ii. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication.iii. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.(Suggested word count: 300-350 words)