Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 12, Problem 18P
To determine
The effect of economic profit on the industry supply curve and existing firms incurring loss/profit.
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Students have asked these similar questions
Assume that a firm in a perfectly competitive industry has the following total cost schedule:
Calculate a marginal cost and an average cost schedule for the firm to complete the following table.
Output
Total Cost
Marginal Cost
Average Cost
(units)
($)
($)
($)
10
440
15
600
20
720
25
900
30
1,200
35
1,540
40
1,920
If the prevailing market price is $68 per unit, units will be produced. Profits per unit will be and total profits will be .
Is the industry in long-run equilibrium at this price?
No
Yes
The following table shows the output and total cost for a firm in a purely competitive industry
Output
TC
AC
MC
0
40
1
95
2
115
3
130
4
150
5
175
6
210
7
260
8
330
If the price of the product is RM50, what will be the equilibrium output of the firm? Calculate the profits or losses.
Assume that there is a perfectly competitive industry with a market demand curve given by: " P = 100-0.5Q " where P is the market price and Q is the industry wide output.
All firms in this industry are identical and that a representative firm's total cost is " TC = 100+5q+q2", where q is the output of the individual firm.
a) In this industry, what is the market price that would prevail in the long run?
(Round your answer to two decimal places.)
b) How many firms will operate in this market in the long run?
(Round your answer to two decimal places.)
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- The following table shows the output and total cost for a firm in a purely competitive industry Output TC AC MC 0 40 1 95 2 115 3 130 4 150 5 175 6 210 7 260 8 330 Is the firm operating in the short-run or long run? Give a reason to your answerarrow_forwardplease answer question 11 and 12 and 13 11- the market price for the product is $29. If company A wants to maximize its profits and sells in a purely competitive market, how many should they produce? 12- using the price given in Q 11, will company A make an economic profit or economic loss? Show your calculation 13- given the economic profit/loss calculate in Q12, will firms enter or leave this industry or is this industry at long run equilibrium? Why?arrow_forwardAssume that the market determined price is $10 in a perfectly competitive industry. A firm is currently producing 100 units of output. Average total cost is $8 while marginal cost is $8 and average variable cost is $6. Is the firm producing the profit-maximizing level of output? Why or why not? If not, what should the firm do?arrow_forward
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