LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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Question
Chapter 10, Problem 6RQ
Subpart (a):
To determine
Relevance of perfect competition .
Subpart (b):
To determine
Relevance of perfect competition.
Subpart (c):
To determine
Relevance of perfect competition.
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In a perfectly competitive market, each firm has a long-run total cost given by LTC = 100Q - 10Q² +
1/2Q³. What is the market's long-run equilibrium price?
00
O 50
O25
150
4
Price and costs (dollars)
20
10 L
O
10
20
MC
O always.
ATC
MR
40
30
Quantity (per day)
The figure above shows a perfectly competitive firm. In the short run, the firm will shut down
only if the AVC of producing 10 units is more than $20.
only if the AVC curve reaches its minimum before 10 units are produced.
only if the AVC of producing 10 units is less than $20.
Costs of production for each competitive firm is given by: C(q) = 1 + q2. Market demand is Qd = 200 - 5p. What is the number of firms
in the long-run equilibrium?
O 110
O 150
O 190
210
Chapter 10 Solutions
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- Stuff, Incorporated is a firm with a total revenue of $1,000, marginal cost of $5, and average variable cost of $4. Both the output and input markets are perfectly competitive and Stuff, Inc. is in long run equilibrium. Stuff, Inc.'s output and total fixed costs must be equal to which of the following? O Output 200; Fixed Cost $200 O Output 200; Fixed Cost $400 O Output 200; Fixed Cost $800 O Output 250; Fixed Cost $800 O Output 250; Fixed Cost $400arrow_forwardSuppose that the pen-making industry is perfectly competitive. Also suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum ATC = $1.25 per pen. If the market equilibrium price of pens is currently $1.50, what would you expect it to be in the long run? LO11.2 a. $0.25. b. $1.00. c. $1.25. d. $1.50.arrow_forward6. Short-run supply and long-run equilibrium Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. (?) 80 72 64 56 ATC 48 40 32 24 18 AVC 8 MC O 12 15 18 21 24 27 30 QUANTITY (Thousands of tons) COSTS (Dollars per ton) 3.arrow_forward
- Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: LO10.3 a. A horizontal line at 2 cents per paper clip. b. A vertical line at 2 cents per paper clip. c. The same as the market demand curve for paper clips. d. Always higher than the firm’s MC curve.arrow_forwardThe following figure shows the revenue and cost curves for a firm X. RM 10 a. b. C. 7 6 LO 5 4 3.5 0 20 25 30 MC 40 AVC AC AR=MR Units If a firm X achieves productivity efficiency, what will be the total revenuel generated At what price will a firm stop operating? Please explain. If the market price is RM4.00, what is the total profit or total loss.arrow_forwardConsider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 18, 80 80 72 64 56 ATC 48 40 32 24 16 AVC 8 + MC O 3 12 15 18 21 24 27 30 QUANTITY OF OUTPUT (Thousands of pounds) COSTS (Dollars per pound)arrow_forward
- ........ # m SI 4. 2. He %3D Consider the following costs for a typical perfectly competitive firm with no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost $24 1. 16.5 6$ 12.67 3. 7. 15 11.25 12 5. 14.83 9. a. Which of the following prices would be associated with a long-run equilibrium? O $11.25 O $15 O $12 Next> < Prev 9 jo 9 72°F Partly sunny 近 ere to search ofile Ball10 F7 F3 & %23 24 4. 2. R. K H B.arrow_forwardRevenue and cost (dollars per unit) 50 40 30 20 20 10 O 10 20 30 MC ATC 40 50 e figure above shows a perfectly competitive firm. If the market price is $20 per unit, then the firm produces A. 30, more than $100 B. 30; zero because the firm earns a normal profit C. 20; less than $400 DD. more than 30; more than $100 DE. 0; zero because the firm earns a normal profit Output (units per day) units and has an economic profit that is,arrow_forwardConsider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 90 80 70 60 50 40 АТС 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pounds) COSTS (Dollars per pound)arrow_forward
- 3. Suppose the doll company American Girl has an inverse demand curve of P = 150 - 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. There production function equals Q = LO.5KO.5, they pay wages of 35 and they pay capital rates of 140. What is their daily long-run profit at the profit-maximizing output level?arrow_forwardQuestion 9 3pts Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $10 per unit and the firm produces 100 units, the firm will earn an economic profit of O $400. O more than $100. O more than zero but less than $100. O zero Question 10 3 pts Figure 6.1arrow_forwardThe figure shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces O A. 20 units of output and earns a normal profit. MC ATC 50 B. 10 units of output and incurs an economic loss. 40 O C. 10 units of output and earns a normal profit. O D. 20 units of output and incurs an economic loss. 30 MR 20 10 10 30 40 Quantity (per day) Price and costs (dollars) 20arrow_forward
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