EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 13, Problem 7QR
To determine
The competitive firm’s price that is equal to the minimum of the
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Does a competitive firm’s price equal the minimumof its average total cost in the short run, in the longrun, or both? Explain.
Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below.
a.What is the level of profit for this firm at the profit maximizing output?
b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find?
c. What do you predict will happen in this market over the long run?
What is the equilibrium or profit-maximizing quantity of production for a perfectly competitive firm?
Chapter 13 Solutions
EBK ESSENTIALS OF ECONOMICS
Ch. 13.1 - Prob. 1QQCh. 13.2 - How does a competitive firm determine its...Ch. 13.3 - Prob. 3QQCh. 13 - Prob. 1QRCh. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QR
Ch. 13 - Prob. 8QRCh. 13 - Prob. 1QCMCCh. 13 - Prob. 2QCMCCh. 13 - Prob. 3QCMCCh. 13 - Prob. 4QCMCCh. 13 - Prob. 5QCMCCh. 13 - Prob. 6QCMCCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - Prob. 6PACh. 13 - A firm in a competitive market receives 500 in...Ch. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PACh. 13 - Prob. 12PA
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- Consider the perfectly competitive market for tofu. Many people use tofu as a substitute for meat. Starting from long-run equilibrium, show graphically what happens in the short and long run to q. Q, P, and in the market for tofu (in comparison to the starting point) if the price of meat is increasing.arrow_forwardThe graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5arrow_forwardGive an example of a price at which this firm would want to produce and sell output in the short run, but not in the long run.arrow_forward
- In the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?arrow_forwardWhat does zero economic profits in the long-run mean to the owner of a business operating in a perfect competitive market?arrow_forwardIf firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explainarrow_forward
- How does a competitive firm determine the quantity that maximizes profit?arrow_forward“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?arrow_forwardIn the short-run, if the marginal cost of a firm in a competitive industry is increasing while its average variable cost is downward sloping, what can you say about slope of average total cost?arrow_forward
- 1. Emad is a lettuce supplier in a perfectly competitive lettuce market in Kuwait. If the demand for lettuce in Kuwait is given by: Qo = 40,000 – 10,000P, Where Q is the quantity of lettuce boxes and P is the price of a lettuce box. In the short-run, Emad's has the following total cost function for his production of lettuce: TCimad = 0.25Q +Q +3 Assume that Emad is one of 1000 sellers in the Kuwaiti lettuce market with identical costs. Answer the following questions: e. wnat is tne market suppiy tunction in the short-run? 1. What is the short-run equilibrium price and equilibrium quantity in this market? g. Draw a rough sketch of the market demand and supply functions, showing the optimal point and all intersections with the horizontal and vertical axes. h. What is the demand function for Emad's lettuce in the short-run?arrow_forwardDescribe how we can identify a competitive firm’s short-run supply curve.arrow_forwardA single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How “small” is “small”?arrow_forward
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