Answered: With the aid of relevant graphs,…

Business

Economics

With the aid of relevant graphs, elaborate on how prices are set in a perfectly competitive marke

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section13.2: Profit Maximization And The Competitive Firm's Supply Curve

Problem 2QQ: How does a competitive firm determine its profit-maximizing level of output? Explain. When does a...

See similar textbooks

Related questions

Q: Demand for Fries QD(P) = 10,000 - 10P N number of firms follow: TC(Q) = 20,000 +0.5Q^2 What…

A: In a perfectly competitive market there are large number of firms produce similar and identical…

Q: following i. equilibrium At the point of tangency between an Isocost line and an isoquant the firm…

A: The isocost line would result in the same cost with the different combinations of labor and capital.…

Q: A new korean restaurant opens in a city. People are initially cautious about eating new food items,…

A: Part a) The health report suggest that people should increase the consumption of Korean food. In the…

Q: discuss why a firm in perfect competition will not charge a price above or below the market price.

A: The perfect competition is a form of market where there are a large number of buyer and sellers,…

Q: omplete the following table by indicating whether each of the scenarios describes the concept of…

A: Tying refers to the requirement that a consumer who buys or leases a product also should purchase…

Q: Assume perfect competition takes place in the market for hotel rooms. The the current market…

A: Perfect competition refers to the situation where there are large number of prouder and consumers…

Q: Question 1: Assume that apples are produced in a perfectly competitive market. Columbia’s Orchard is…

A: a) Given below is the graph of a single firm in which the price is $10 and profit maximizing…

Q: Are there barriers to entry in a Perfect Competition market? Explain in detail.

A: In perfect competition, there is homogeneity in the products sold by the consumers. This means that…

Q: Now suppose that the state of Alabama eliminates its system of licensing Alabama alligator sausage…

A: Equilibrium quantity and price is determined where market demand and supply is in equilibrium.…

Q: EXAMPLE: Paulo's Ping Pong Balls Is a firm that operates in a competitive market. The ping pong…

A: The firm is a part of competitive market.

Q: Christine is the general manager of a local automated car wash. The market she operates in is…

A: In perfect competition, at equilibrium, price is equal to marginal cost which again is equal to…

Q: A large city has nearly 500 restaurants, with new ones entering regularly as the population grows.…

A: A perfectly competitive market alludes to a market structure in which there are countless firms and…

Q: As we begin to study different market structures, consider a market that is fiercely competitive.…

A: The market structure can be divided into four based on the degree of competition and the type of…

Q: Which of the following statements is true about the changes that occur after the supermarkets merge?…

Q: Use the table below to answer questions about Christina's Christmas Wreaths. Christina operates in a…

A: We have given price = 64 for product the product. Due to given price, MR becomes equals to the…

Q: Explain how a firm would maximise its profit, assuming that it faces conditions of perfect…

A: In a perfectly competitive market there are large number of firms producing similar and identical…

Q: f price is less than average cost under pure competition, ____ firms will exit the industry, supply…

A: A marketing circumstance where there are countless merchants of an item which can't be separated…

Q: a) Distinguish between a perfect competition market and a monopoly market in an economy?

A: In economics, there exists mainly four kinds of market structure and these market structures are…

Q: In a perfectly competitive market, there are firms, all selling products. Select one: a. several…

A: In a perfectly competitive market the price are market determined and all firms are price price…

Q: You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you…

A: There is a difference between the cost function in the short-run and in the long-run due to which…

Q: Fabulous Farms operates in a perfectly competitive market. Which of the following is required for…

A: In a perfect competition market there is large number of buyer and sellers of good, also in…

Q: Using an appropriate diagram, explain how a perfectly competition firm achieves profit- maximising…

A: The structure of the market where there exist many firms who sell homogenous goods to many buyers…

Q: Assume that the tuna fishing industry is perfectly competitive. Which of the following best…

A: perfect competition is a market structure where all the firms are selling an identical or…

Q: Discuss the equilibrium conditions for a market under perfect competition.

A: Perfect competition is an economic phrase for a hypothetical market system in which all suppliers…

Q: Firms always lose money in a long-run industry equilibrium, true or false?

A: Firms always lose money in a long-run industry equilibrium, true or false.

Q: What is the profit-maximizing output? Output: b. What price will the firm charge?…

Q: The following attached graph represents the situation of Sindbad’s caps, a firm selling caps in the…

A: In a competitive market, the firm will earn more and more profits when the revenue that is marginal…

Q: Raphael's hair salon is a monopoly in a small town and is currently earning an economic profit. a)…

A: The monopoly refers to the a market structure in which there is only a single seller of a unique…

Q: Larry, Curly, and Moe run the only saloon in town.Larry wants to sell as many drinks as possible…

A: The total cost incurred by firms operating in a market includes fixed costs and variable costs.…

Q: The Nintari Company produces video-game-playing machines and a second firm, Necsega, owns exclusive…

A: Imperfectly Competitive Market An imperfect competition market is a situation where there is a…

Q: level of output, the

A: A competitive market consists of a large numbers of producers competing with each other for…

Q: How would the introduction of legal or technical barrier to entry affect the long-run equilibrium in…

A: *Answer:

Q: Based on the graph above, answer all the questions below. a) Justify the type of market structure…

A: There is two markets that we can consider: 1- Perfectly competitive market 2- Imperfect market Under…

Q: What are the main characteristics of a competitivemarket?

A: A perfectly competitive market is the one, where there are a large number of firms selling…

Q: The diagram above shows a Perfectly Competitive market on the left, and a representative firm…

A: In the given industry demand and supply, the equilibrium price is 7 $. At this price the firm in the…

Q: The bread market, which is not differentiated, is characterized by many buyers and sellers. Identify…

A: The bread market, which is not differentiated, is characterized by many buyers and sellers implies…

Q: How much output should Sindbad produce to maximize his profit, if the market price is equal to $11?…

A: (1) The equilibrium condition for profit maximization of a perfectly (PC) competitive firms is…

Q: Suppose that Redeye's Game Emporium is in a market with imperfect competition. The graph below shows…

A: Firms in imperfect competition maximize profit by producing at a level where marginal revenue equals…

Q: List and explain three reasons for strong barriers to entry that make it difficult for new firms to…

A: In competitive firms, there are either no barriers to entry or very less barriers to entry that…

Q: Q2. In Pakistan, there are several farmers in various situations, selling identical products to the…

A: Perfect competition refers to a market structure in which there are a large number of buyers and…

Q: List and briefly describe two benefits and three costs of an imperfectly competitive market…

A: Meaning of Market: The term market refers to the situation under which the producers or the…

Q: By making use of graphs explain the difference between perfect competition and monopoly market.…

A: Monopoly and perfect competition are two extremely opposite kinds of market structure. In the case…

Q: What form of competition best characterizes this market? What characteristics did you identify that…

A: Monopolistic competition: The salient feature of monopolistic competitive market is product…

Q: How does a competitive firm determine its profit-maximizing level of out put? Explain. . When does a…

A: A competitive firm determines its profit maximizing level of output when P= MR= MC When the…

Q: Using diagrams for both the industry and a competitive firm, illustrate competitive long-Run…

A: A competitive industry consists of a large number of small firms that lack a relevant individual…

Question

With the aid of relevant graphs, elaborate on how prices are set in a perfectly competitive
market.

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What are the main characteristics of a competitivemarket?
What type of market structure is this toilet paper most likely to be in? Describe at least three characteristics of that market structure.
In the year 2000, the town of Cuenca in Batangas did not have mountain resorts. Because of the influx of mountaineers to Mount Maculot during weekends, there are now five resorts operating in the said town and more than 10 resorts in nearby towns. All these resorts offer the same amenities—swimming pools and affordable lodgings. What feature of competitive markets does this demonstrate? Explain your answer.
You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you infer about the profits of this firm?
List and explain the importance of each of the five characteristics of purely competitive markets.
Assume perfect competition takes place in the market for hotel rooms. The the current market equilibrium price of a standard room is RM300 per night. a. Show that the current market balance is efficient, assuming that both the marginal cost borne by the seller and the marginal profit which the buyer feels reflects all the costs and benefits associated with production and use of hotel rooms. Draw a graph to illustrate you answer.
Use a supply-and-demand diagram of a competitivemarket to illustrate the qualitative effects of the following possible shocks in the Italian market for red wine.a. A new research study shows that red winehelps prevent heart disease, stave off aging, and reduce age-related memory decline.b. Trade barriers that restricted imports of red wine from countries outside the European Union are eliminated.c. A recession in Italy causes a decline in per capita income.d. Genetically engineered wine grapes are created that allow for greater red wine production without increasing cost.
.What does the demand curve for a perfectly competitive individual seller look like? Explain the logic behind it.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario Is the market competitive? There are thousands of ninth and tenth graders in need of geometry tutoring services in Chicago. Of the twenty or so companies in town currently offering geometry tutoring, parents of high schoolers view the quality of each individual tutoring service to be about the same. There are thousands of car dealerships that serve millions of consumers each year. The dealerships vary by location, offerings, and quality, allowing consumers with an array of preferences to find vehicles that match their individual needs. A few major airline companies represent a great majority of total air travel. Consumers consider all different flights to be essentially the same, and comparison shop for the lowest price. The government has granted the U.S. Postal Service the exclusive right to…
All buyers in a perfectly competitive market set prices to compete in their market? is it true or false
Why are sellers in perfect competition unable to increase prices?
Are there barriers to entry in a Perfect Competition market? Explain in detail.