Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 1PA
Subpart (a):
To determine
The impact of increasing price.
Subpart (b):
To determine
The impact of increasing price.
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Show the competitive firm in long run equilibrium and describe productive and allocative efficiency. Demonstrate what happens to equilibrium price and quantity with an increase in market demand. Can the firm make economic profit in the short run? What about the long run?
2. Many small boats are made of fiberglass, which is derived from crude oil. Suppose that the price of oil rises.
( a ) Using diagrams, show what happens to the cost curves of an individual boat-making firm and to the market supply curve.( b ) What happens to the profits of boat makers in the short run? What happens to the number of boat makers in the long run?
A requirement for a perfectly competitive market is that the sellers sell identical products (consumers don't care who makes the products sold in that market). Think about this from the perspective of the seller. What are the benefits of this? What are the drawbacks?
Chapter 14 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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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- Economics 1. Rob Doe just started a ice cream business within a perfectly competitive market. The new business man was told that he would charge a price that is equal to marginal revenue. The market clearing price for ice cream is $20 dollars per scoop. The total cost for producing ice cream is given by: Total cost = q2 + 100q + 500 where q is the number of ice cream produced in a typical day. a. How many ice cream should Rob choose to produce to maximize profit? b. Calculate Rob's maximum daily profit c. Graph these results, and label Rob's supply curvearrow_forwardWhat is long run and short run production? What is immediate market periodarrow_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
- . The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a) How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer?b) Draw a graph, illustrating the present situation for the typical firm that is making losses.c) Assuming there is no change in demand or the firm's cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the marketarrow_forwardI am learning about pure competition in short and long run in intro to microeconomics. How would a pizzeria in a densely populated area with 20 to 50 competitors thrive in a pure short competition market compared to a long-run competition?arrow_forwardYou read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? a. The prices of agricultural products how will this affect the market equilibrium price of the agricultural products? Will it remain the same, increase or decrease?arrow_forward
- 4. The Diversified Vegetable Company grows two crops, tomatoes and zucchini. The firm is a price-taking seller. The price of a bushel of tomatoes is $20, while the price of a bushel of zucchini is $30. The firm uses the same land and the same workers to raise the two crops, and its total cost for the two crops is 5T^2 + 6Z^2 + TZ, where T and Z are the respective quantities of tomatoes and zucchini. Find the following: A. The profit maximizing level of production of tomatoes and zucchini. B. The maximized profits.arrow_forwardCan excess profit be earned in perfectly competitive markets in the long run. Explain.arrow_forwardDraw a graph of a typical firm and an industry market (with supply and demand). Illustrate and explain what happens in the market if at the initial price, the typical firm is earning an economic profit. Show and explain how the two graphs will adjust toward market equilibrium.arrow_forward
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