Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 12, Problem 10P
To determine
(a)
The relationship between a
To determine
(b)
The effect of an increase in the market demand on a perfectly competitive firm's demand curve.
To determine
(c)
The effect of a decrease in the market demand on a perfectly competitive firm's demand curve.
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Write True or False and explain briefly
1- Consider a firm in a perfectly competitive market.There are situations where it is optimal for the firm to continue operating in the short-run , but shut down in the long-run.
2- Consider a firm in a perfectly competitive market.There are situations where it is optimal for the firm to shut-down in the short-run , but continue to operate in the long-run.
60. In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?
A. an increase in labor costs
B. a decrease in market demand
C. an increase in market demand
D. an increase in the number of firms
Explain the three conditions held at the long-run equilibrium in a perfectly competitive market with a diagram.
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Similar questions
explain why is the long run market supply curve horizontal in long run in perfect competitive market?
How does a competitive firm determine the quantity that maximizes profit?
When might a competitive firm shutdown in the short run and exit the market in the long run?
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(10) In long-run equilibrium in a perfectly competitive market, which of the following is true?
(a) Average cost equals marginal cost
(b)Profit = 0
(C)Price equals marginal cost
(d)all of the above
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Here i a list of the following conditions of a perfectly competitive market.Which characteristic is wrong for a perfectly competitive market?
a)There is complete information
b)Firms products are differentiated
c)The number of firms is large
d)Firms are price takers
e)There are any barriers to entry
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choose 1
if, for the last unit of a good produced by a perfectly competitive firm, MR>MC, then in producing it the firm:
1- added more to total revenue than it added to total costs
2-is maximizing marginal profit
3-has minimized its losses
4-added more to total costs than it added to total revenue
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Discuss the long-term effects in a perfectly competitive market if an existing firm is making profits and also losses . Use appropriate graphs to illustrate your explanations.
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Explain the concept of a perfectly competitive market and its characteristics.
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Which of the following is a characteristic of a perfectly competitive market?
A) Many buyers and one seller B) Few buyers and few sellers C) Many buyers and many sellers
D) One buyer and many sellers
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Assume that you have a representative farm producing wheat in a perfectly competitive market. The overall demand for wheat is made up of two components – domestic demand and foreign demand. Due to tariff disputes with the U.S., the European Union (EU) has urged its member nations to reduce their demand for U.S. agricultural products (including wheat). As a result, the foreign demand for U.S. wheat has declined by 20% this year. Using diagrams for a representative farm (i.e., wheat producer) and the market for wheat, analyze the impact of this decrease in foreign demand on the farm’s output and profit (loss) in the short-run and long run. Assume that the farm was in long-run equilibrium (i.e., earning zero economic profits) before the decrease in the foreign demand for wheat. Also, assume that the farm was facing a U-shaped AC curve and the typical upward-sloping MC curve. Provide a brief description of all the changes that occur and be sure to clearly denote those changes in your…
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What is the main characteristic of a perfectly competitive market?A. Many sellers with differentiated productsB. Few sellers with differentiated productsC. Many sellers with identical productsD. Few sellers with identical products
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Assume that apples are produced in a perfectly competitive market. Columbia’s Orchard is a typical firm that grows and sells apples. Currently, Columbia earns zero economic profit, and the market price of apples is $10 per basket.
b. Suppose an increase in the popularity of apple, the demand for apple increases. How will the increase in the demand for apples affect Columbia’s economic profit in the short run? Explain.
Answer:
c. What will happen to Columbia’s economic profit in the long run? Explain.
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Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Carefully explain your answer.
2. Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Using your graph, determine whether this firm will shut down in the short run, or choose to remain in the market.
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List the characteristics needed for a perfectly competitive market. Provide a simple explanation of each - your explanation should explain how does that characteristic enable a perfectly competitive firm to form/exisit.
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