Principles of Microeconomics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165905
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 2CQQ
To determine
The condition of the competitive firm maximizing the profit by choosing the quantity.
Expert Solution & Answer
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Students have asked these similar questions
a. Draw the marginal cost and average total cost curves for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do.
b. Does a competitive firm’s price equal its marginal cost in the short run, in the long run, or both? Explain.
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
A. keep producing in the short run but exit the market in the long run.
B. shut down in the short run but return to production in the long run
C. shut down in the short run and exit the market in the long run.
D. keep producing both in the short run and in the long run.
In Long-Run Competitive Equilibrium it is included as a cost and are not included in economic profit.
a.
profit maximization
b.
zero profit condition
c.
normal profit
d.
none of this
Chapter 14 Solutions
Principles of Microeconomics, 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. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQCh. 14 - Prob. 6CQQCh. 14 - Prob. 1QR
Ch. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 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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Similar questions
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- A competitive firm maximizes profit by choosing thequantity at whicha. average total cost is at its minimum.b. marginal cost equals the price.c. average total cost equals the price.d. marginal cost equals average total cost.arrow_forwardCost MC Select one: ATC AVC ABC D Quantity C in the figure above represents the output level where the firm Quantity a. maximizes profits in the short-run. b. minimizes total costs in the short-run. C. maximizes profits in the long-run. d. minimizes marginal costs in the long-run. e. None of the above.arrow_forwardProfits are maximized at the output at which marginal cost equals marginal revenue. If the market price falls below the minimum average variable cost: a. the firm should produce less. b. the firm should produce more. c. the firm should shut down. d. none of the abovearrow_forward
- Consider the following data: equilibrium price = $7.50, quantity of output produced 100 units, average total cost = $9, and average variable cost = $8. What will the firm do and why? = a. Shut down in the short run, because price is below average variable cost. b. Shut down in the short run, because price is below average total cost. c. Continue to produce in the short run, because price is greater than average variable cost. d. Continue to produce in the short run, because firms are always stuck with having to produce in the short run.arrow_forwardIf a profit-maximizing firm in a perfectly competitive market is currently producing the output where (price - average variable cost) > average fixed cost, the firm is: A. making a positive economic profit. B. making a zero economic profit. C. suffering an economic loss. D. None of these.arrow_forwardTomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which sell for $30 a bushel. At this level of output, the marginal cost is $30 a bushel, average variable cost is $30.50 a bushel, and average total cost is $34.50 a bushel. (a) What is the firm’s total fixed cost? You must show your work.arrow_forward
- 1.The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. A. The price of fertilizer must be less than marginal cost. B. The price of fertilizer must be equal to average variable cost. C. The price of fertilizer must be less than average total cost. 2. If firms in the market are producing output but are currently making economic losses,_________ illustrates the present situation for the typical firm in the market, and_________ indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. A.The quantity supplied by each firm will decrease. B.The total quantity supplied to the market will decrease. C.The…arrow_forwardA competitive firm maximizes profit when marginal cost: a. equals the price. b. is less than the price. c. is minimized. d. is greater than the price.arrow_forwardRevenue and cost (dollars per unit) MC AVC 50 40 30 20 10 10 20 30 40 50 Output (units per day) The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should Select one: a. produce 30 units. b. produce more than 30 units and less than 40 units. c. produce 40 units. d. shut down. e. produce more than 10 and less than 30 units.arrow_forward
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