MICROECONOMICS (LL) W/ CONNECT
21st Edition
ISBN: 9781260270020
Author: McConnell
Publisher: MCG
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Chapter 10.6, Problem 3QQ
To determine
Normal profit.
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Assume a competitive firm faces a market price of $120, a cost curve of:
C = 13q3 + 20q + 500,
and a marginal cost of:
MC = q2 +20.
What is the firm's profit maximizing output level?
?? Units (round your answer to two decimal places)
What is the firm's profit maximizing price?
??? (round to the nearest penny)
What is the firm's profit?
??? (round to the nearest npenny)
In the short-run, this firm should ??
produce or shut down??
4. The cost function for a firm facing perfect competition isC(q)=1000+25q-0.5q²+0.01q^3What is the minimum price at which this firm will produce q> 0 in the short run? Show your work.
Q1:
Underer the assumption of perfect competition in short run firms only earn abnormal profit. True/False. Explain your answer theoretically and graphically.
Chapter 10 Solutions
MICROECONOMICS (LL) W/ CONNECT
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- Q18 solution needed Question 18 If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ? Group of answer choices Raise it's prices Exit the market Lower it's quantity produced Lower it's prices to try to sell morearrow_forwardAssume that a firm in a perfectly competitive industry has the following total cost schedule:OUTPUT (UNITS) TOTAL COST ($) 10 110 15 150 20 180 25 225 30 300 35 385 40 480a. Calculate a marginal cost and an average cost schedule for the firm. b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are profits per unit? What are total profits? c. Is the industry in long-run equilibrium at this price?arrow_forwardA foodstuff firm has variable cost function: VC = 2q(q+1). The foodstuff market isconsidered as perfect competition market with many firms that are doing business.a. Find the short run supply curve of the firm?b. The firm is break even at total revenue of $702. Calculate the firm’s price and output atthis break-even point?c. What is the firm’s fixed cost?d. Calculate the price at which firm will shut-down its business?arrow_forward
- (a) Calculate this firm’s marginal cost for output level 5. (b) Calculate this firm’s marginal cost for output level 6. (c) What is the average total cost at which, this firm reaches its break even-point? (d) What is the average variable cost at which, this firm reaches its shut-down point?arrow_forwardA competitive firm has the short-run cost function C(y) = 12y3−8y2+30y+12. At what price will the firm agree to produce in the short run? What is the shutdown condition for this firm? Show all working and explanation.arrow_forwardIn perfect competition marginal cost curve of a firm shows supply curve of the firm in short run. True/False. Elaborate your answer theoreticallya andgraphically.arrow_forward
- The attached figure shows the short-run cost curves for a perfectly competitive firm. If the price of the product were $8, and the firm does not close, the firm's short-run output will be:a. 0 (zero)b. between 0 (zero) and 10c. 10 or mored. Cannot be determined unless more information is available.Please elaborate on your answer to each alternative, whether it is true, false or uncertain.arrow_forwardQuestion 12 (i) Monica can go to work today and earn $500. However, she is also thinking about studying for the English test. If she studies for the English test she will not be able to go to work. What is Monica’s opportunity cost of studying for the English test? A: $0 B: $500 C: $500 minus the benefit from studying for the test D: The benefit of studying for the test minus $500 (ii) Which of the following is(are) considered as sunk cost for a competitive firm in the short-run? Variable cost Fixed cost A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2arrow_forwardIn the short run, a perfectly competitive firm's economic profits Question 7 options: must be negative, that is the firm must incur an economic loss. might be positive, negative (an economic loss), or zero (a normal profit). must be positive. must equal zero, that is, the firm earns a normal profit.arrow_forward
- In a perfect competitive industry, the market price is R20. An individual firm produces output at which MC=R25. What should the firm do to maximise profits or to minimise losses in the short run? A. they should leave the output unchanged. B. they should increse production. C. they should decrease production. D. they should shut down.arrow_forward9 The total cost function for a PC firm is as follows: TC=100+160Q-8Q2+0.4Q3 What is the minimum price a firm would accept to stay open in the short-run? a. P=$20 b. P=$80 c. P=$120 d. P=$100 e. None of the abovearrow_forwardAt current output a perfectly competitive firm finds that Marginal Revenue (MR) = 80 , Marginal Cost (MC=80), Average Variable Cost (AVC)=40, Average Total Cost (ATC)=75, quantity (Q)=100. In the long-run, what will happen to the number of firms in the industry, industry output, market price, and the output of a typical firm? Explain. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
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