Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 11.6, Problem 1QQ
To determine
Price determination.
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a.
the portion of MC above ATC
b.
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c.
where MC meets ATC
d.
the portion of MC above AVC
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- 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_forwardYou are the manager and selling your product in a perfectly competitive firm market. Your firm and other firms sell the product at a price of RM 90. Your cost function is C(Q) = 50 + 10Q + 2 Q2. What level of output should you choose to maximize profits? What are your firm’s short run profits? What will happen in your market in the long run? Explain.arrow_forwardA competitive firm’s short-run supply curve is its_________ cost curve above its _________ costcurve.a. average-total-; marginalb. average-variable-; marginalc. marginal-; average-totald. marginal-; average-variablearrow_forward
- In the short run, when average variable cost of production is less than the price, a price takers firm will set production to: A zero B Where MC=MR C Where TR=TC D Where AC=MR E Where p = ACarrow_forwardThe long-run competitive market supply curve is: a)The portion of the firms MC curve that is above the ATC curveb)The portion of the firms MC curve that is above the AVC curvec)The horizontal summation of all the firm’s short-run supply curvesd)A curve that is equal to the minimum of ATCe) a) and d)arrow_forwardExplain: “The short-run rule for operating or shutting down is P > AVC, operate; P < AVC shut down. The long-run rule for continuing in business or exiting the industry is P >= ATC, continue; P < ATC, exit.”arrow_forward
- Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's economic and accounting profits in the short run ? A. Economic profits are minus $10 and accounting profits are $20 B.Economic profits are $20 and accounting profits are minus $10 C. None Which one?arrow_forwardDraw the short run marginal cost curve for a firm with eventually diminishing marginal product. Then, draw an associated average variable and average total cost curve. Indicate the quantity associated with minimum average variable and average total cost. Then, indicate the price at which a firm is indifferent between shutdown and exit and the price at which a firm is indifferent between entry and exit.arrow_forwardSuppose perfect competitive firm short run cost function total cost=1/3q3+3q2+10Q+40 . if the market price of the commodity is birr 26 per unit A, determine the profit maximizing level of out put B find average fixed cost ,average cost ,average variable cost and marginal cost of firm at optimum level of out put C find maximum profit of the firmarrow_forward
- A firm’s cost curves are given in the following table.(Photo) Complete the table. If the total fixed cost is RO80, Graph AVC, ATC and MC on the same graph. What is the relationship between the MC curve and the ATC and between MC and AVC?Suppose the market price is RO 40, how much will the firm produce in the short run? Calculate the total revenue also. Select one:a. None of the other three answersb. 320 ROc. 350 ROd. 240 ROarrow_forwardA perfectly competitive firm would produce______________________________________if it wanted to maximize its profit: Answers: A. the output where MC equals price, the marginal revenue B. the output where the ATC curve is at a minimum C. as much output as it is able to produce D. the output where the marginal cost curve is at a minimumarrow_forwardWhich of the FF. shows the connection between the short run and the long run equilibrium? A. positive economic profits in the short run attracts other firms to enter the industry B. negative economic profits in the short run forces the losing firms to exit from the industry C. the entry and exit will stop once the economic profits become zero, thus, attaining a long run equiilibrium D. all are correct E. none is correctarrow_forward
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