PRINC. OF ECON. LOOSE W/APLIA+COUPON
7th Edition
ISBN: 9781337365635
Author: Mankiw
Publisher: CENGAGE C
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Chapter 14, Problem 1QCMC
To determine
To determine: The characteristic of the perfect competitive firm.
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A competitive firm can increase profit by_____________________if marginal cost exceeds price.
Answers:
A.
Cutting output
B.
Raising its price
C.
Making no change in output
D.
Raising output
Draw the short-run ATC, AVC, MC, MR and Demand graphs for a perfectly competitive market experiencing a profit.
In each part, show Total Cost (TC), Total Revenue (TR), shade the profit. Clearly label Q for the equilibrium quantity point and P for market price point.
The marginal cost to produce one bottle of developer is $5. There is no fixed cost. Note that this is a market demand, not a firm's individual demand schedule.
1)Calculate total revenue, total cost, marginal revenue and total profit.
Quantity Demanded : 0, 10, 20, 30, 40, 50, 60, 70, 80
Price: 40, 35, 30, 25, 20, 15, 10, 5, 0
2) If the market for developer is perfectly competitive, what quantity will be produced?
What price will be charged? What will the firm’s profit be? Write a sentence explaining how you
determined each of those three answe
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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- A) Refer to the table (image). If the price is $6, the perfectly competitive firm should produce B) Refer to the table (image). If the price is $5, the maximum economic profits this firm could earn isarrow_forwardWhich of the below changes in demand in the long-run would lead to entry in the perfectly competitive market for wheat? a. a decrease in the number of buyers b. a decrease in buyers' expected price of wheat c. an increase in income (wheat is a normal good) d. both a) and b) would lead to long-run entry in perfect competitionarrow_forwardA competitive firm is maximizing its profit by selling 150 units of output. The firm’s marginal cost is $8 and its average total cost is $6. The firm’s profit amounts to what?arrow_forward
- 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 firmsarrow_forwardFirms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? The market in the long run?arrow_forwardPerfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, then the firm will set its price at ____ and produce ____ units. $4; 40 $6; 40 $6; 55 $6; 30arrow_forward
- Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.arrow_forwardA perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its Select one: a. average variable cost. b. marginal revenue. c. average total cost. d. average fixed cost. Clear my choicearrow_forwardA firm operates in a perfectly competitive market. Its marginal cost = to its marginal revenue. It is incurring economic losses . Based on this information, which of the following is true? a) An increase in output will decrease the forms economic losses. b) a decrease in output will decrease the firms economic losses. c) Any change in output will fail to result in positive economic profits. d) An increase in price will decrease the firms economic losses. e) the forms marginal revenue exceeds its outputs average total costarrow_forward
- Agriculture in India is mostly characterized by Perfectly Competitive Market! What are the characteristics you can identify that support the statement? Analyze the reason behind bumper harvest sometimes not always good news for farmers. What strategies will you suggest for the farmers to earn profits that in spite of perfectly competitive market they can get competitive advantage in agriculture industry?arrow_forwardA 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?arrow_forwardIn the long run, firms in a competitive marketA.earn positive accounting profit, but zero economic profit.B.earn zero accounting profit and zero economic profit.C.shut down because their accounting profit goes to zero.D.earn negative accounting profit, but positive economic profit.arrow_forward
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