PRINC. OF ECON. LOOSE W/APLIA+COUPON
7th Edition
ISBN: 9781337365635
Author: Mankiw
Publisher: CENGAGE C
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Question
Chapter 14, Problem 11PA
Subpart (a):
To determine
Impact of trade in the perfect competition .
Subpart (b):
To determine
Impact of trade in the perfect competition.
Subpart (c):
To determine
Impact of trade in the perfect competition.
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Students have asked these similar questions
If there were 10 firms in this market, the short-run equilibrium price of steel would be $___ per tonne.
At that price, firms in this industry would [(A) earn a positive profit (B) earn a zero profit (C) operate at a loss (D)shut down]. Therefore, in the long run, firms would _____ the steel market.
2) Because you know that competitive firms earn ____ economic profit in the long run, you know the long-run equilibrium price must be $ ____ per tonne. From the graph, you can see that this means there will be ___ firms operating in the steel industry in long-run equilibrium.
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Entrepreneurs shift capital and labor across industries in pursuit of profit. Let’s look at this a little more closely. Suppose there are two industries: a high‑profit industry, Industry H, and a low‑profit industry, Industry L. Answer the following questions about these two industries.
a. If the two industries have similar costs, then what must be true about prices in the two industries?
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must be lower in Industry H than in Industry L.
must be higher in Industry H than in Industry L.
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Suppose that the monthly market demand schedule for Frisbees is:
Price
$8
$7
$6
$5
$4
$3
$2
$1
Quantity Demanded
100
200
400
800
1,600
3,200
6,000
15,000
Suppose further that the marginal and average costs of Frisbee production for every competitive firm are
Rate of Output
10
20
30
40
50
60
Marginal Cost
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
Average Cost
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
Finally, assume that the equilibrium market price is $5 per Frisbee.
(a) How many Frisbees are being sold in equilibrium?
(b) How many (identical) firms are initially producing Frisbees?
(c) How much profit is the typical firm making?
(d) In view of the profits being made, more firms will want to get into Frisbee production. In the long run, these new firms will shift the market supply curve to the right and push the price down to average total cost, thereby…
Chapter 14 Solutions
PRINC. OF ECON. LOOSE W/APLIA+COUPON
Ch. 14.1 - Prob. 1QQCh. 14.2 - How does a competitive firm determine its...Ch. 14.3 - Prob. 3QQCh. 14 - Prob. 1QRCh. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QR
Ch. 14 - Prob. 8QRCh. 14 - Prob. 1QCMCCh. 14 - Prob. 2QCMCCh. 14 - Prob. 3QCMCCh. 14 - Prob. 4QCMCCh. 14 - Prob. 5QCMCCh. 14 - Prob. 6QCMCCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PACh. 14 - Prob. 12PA
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