Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market structures? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive.
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Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market structures? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive.
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- Why is the equality of marginal revenue and marginal cost essential for profit maximization? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive.Assume agricultural products are identical and there are many sellers and buyers of agriculture products: State the profit-maximizing condition for each seller of agricultural products. Graphically, it shows the market equilibrium of the industry and a seller where economic profits equal zero. Please include marginal revenues, demand curve, price, and quantity at the equilibrium. From part b above, if the number of buyers increases, show the new short-run equilibrium for a seller and the industry as a whole.in a perfectly competitive market with a constant cost industry, there are currently 100 identical firms, each with the total cost function TC(Q) = Q^2 + 4Q + 36. The market demand is Q = 1800 – 50p. a. What is the price at the short-run equilibrium? What is the net profit/loss of each firm at this price? b. In the long run, how many firms will enter into /exit from the market?
- Explain the marginal revenue and marginal cost approach to profit maximization and use it to describe profit, loss, and shut down situations for the purely competitive firm.Why is the equality of marginal revenue and marginal cost essential for profifit maximization in all market structures? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive.Assume that the market determined price is $10 in a perfectly competitive industry. A firm is currently producing 100 units of output. Average total cost is $8 while marginal cost is $8 and average variable cost is $6. Is the firm producing the profit-maximizing level of output? Why or why not? If not, what should the firm do?
- A perfectly competitive industry is composed of 100 identical firms with cost structure: q TC VC FC AVC ATC MC 0 4 1 8 2 10 3 14 4 20 5 28 6 38 b) Assuming that the market price is p = 8, what are the quantity produced by each firm and the profit it makes?Discuss to what extent you agree with the following statements. Firms facing loss in short run may continue to produce in a competitive market structure.Assume that there is a perfectly competitive industry with a market demand curve given by: " P = 100-0.5Q " where P is the market price and Q is the industry wide output. All firms in this industry are identical and that a representative firm's total cost is " TC = 100+5q+q2", where q is the output of the individual firm. a) In this industry, what is the market price that would prevail in the long run? (Round your answer to two decimal places.) b) How many firms will operate in this market in the long run? (Round your answer to two decimal places.)
- Consider a competitive industry with a large number of firms, all of which have identical cost functions c(y) = y2 + 1 if y > 0 and c(y) = 0 if y = 0. The demand curve for this industry is D(p)= 52-p. 1. Find marginal cost and average cost functions.2. What is the competitive price in this market?3. What will be the number of firms in the industry?Consider a competitive industry with a large number of firms, all of which have identical cost functions c(y) = y2 + 1 if y > 0 and c(y) = 0 ify = 0. The demand curve for this industry is D(p)= 52-p.1. Find marginal cost and average cost functions.2. What is the competitive price in this market?3. What will be the number of firms in the industry?Explain the statement " the existence of extra-normal or economic profit will ensure their elimination in a perfectly or purely competitive industry"
