Which of the following is a condition that would cause a profit maximizing firm to exit? O A. Price < Average Cost O B. Total Revenue - Total Cost < 0 OC. Price - Average Variable Cost > 0 O D.Price < Marginal Cost O E. Both A and B are correct
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- Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand 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 firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?. A firm in a perfectly competitive industry currently faces a market price of $20 and is maximizing profit by producing 500 units of output at this price. The firm’s total costs are $14,000, of which $5,000 are fixed costs. a) How much profit is the firm making? (Show how you determine this.) b) Should the firm continue to produce in the short run? Explain fully. c) Should the firm continue to produce in the long run? Explain clearly WHY the long run decision may be different than the short run decision, assuming the firm expects no changes in demand conditions.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.
- Answer the following: 1. Assuming that the product’s price is P58 per pack, should the competitor sell in the short-runWhy or why not?If it decides to sell, what will be the profit-maximizing (or loss-minimizing output per day)?What is the profit (or loss) that the seller can realize per day? What is the profit (or loss) per pack?A. Assuming that the product price is P42 per pack, answer the same questions in letter A.B. Because of increasing sellers of masks in the market, the product’s price further decreased to P32per pack. Again, answer the same questions in letter A.C. When is this seller going to shut down?D. Now generate the seller’s supply curve of mask in the short run.A perfectly competitive firm decides to shut down if: O the price falls below the average-total-cost. O the price falls below the marginal cost. average revenue falls below the average-variable-cost. O the average revenue curve lies below the marginal cost curve. the total revenue is less than total cost.Please no written by hand solutions 7If SRTC 200+2q+4qwhere q is output, the firm's short-run supply function is a.P = 2 + 8q for P >= 2 and zero otherwise b. q = 0 P < 2; 0.125P - 0.25 P >= 2 c.P = 2 + 8a for p > 0 and zero otherwise. d.q = 0 P < 0; 0.125P - 0.25 P >= 0 8 Each firm in a perfectly competitive market has long-run average total cost represented as ATC+100/q. Long-run marginal cost is MC = 200q - 10 The market demand is O^ prime =215 dot 0 * 5P . At the long-run equilibrium price, how many firms are in the market? a= 500 b. n = 1000 c. n = 1200 d.n-2000 e.n = 2400
- The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal cost c) Why does a competitive firm is considered as a price taker and Monopoly firm as a price makerThe market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal costc) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker.(a) What are the basic assumptions that need to be satisfied for a market to be called perfectly competitive? List them one after the other. (b) What must be satisfied (in the general case) for a firm to be maximizing profit in the short run? (That is, what condition must hold at the profit-maximizing output level for a general firm in the short run?)
- a. Why is the marginal revenue of a perfectly competitive firm equal to the market price? b. Would a perfectly competitive firm produce if price were less than the minimum level of average variable cost? Why?The profit-maximizing quantity is the one at which the marginal revenue of the last unit was: O greater than the marginal cost. O less than the marginal cost. O equal to the marginal cost. O zero.A firm will operate so long as the price O A. exceeds average variable cost. OB. equals the opportunity cost. O C. exceeds average fixed cost. O D. exceeds average total cost.
