Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 14, Problem 3CQQ
To determine
The cost curves effects on short run supply curve.
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A competitive firmās short-run supply curve is its_________ cost curve above its _________ costcurve.a. average-total-; marginalb. average-variable-; marginalc. marginal-; average-totald. marginal-; average-variable
4. A competitive firmās short-run supply curve is its________ cost curve above its ________ cost curve.a. average total, marginalb. average variable, marginalc. marginal, average totald. marginal, average variable
A perfectly competitive firm faces the short-run cost schedule shown in Table 1.
A) Ā Calculate average total cost (ATC=TC/Q), marginal cost (MC=āTC/āQ) and marginal revenue (MR=āTR/āQ) for each level of output. The price per unit of output is Ā£16.
B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At whatĀ output is profit maximised?
C) How much profit/loss is made at the optimum level of output?
Chapter 14 Solutions
Principles of Microeconomics (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 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Suppose that each firm in a competitive industry...
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- A competitive firmās short-run supply curve is its cost curve above its cost curve . a. average-total-; marginal- b. average-variable-; marginal- c.marginal-; average-total- d. marginal-; average-variable- Note: don't use chat botarrow_forwardIn the long-run equilibriumof a competitive market with identical firms,what are the relationships among price P,marginal cost MC,and average cost of ATC? a.P>Ā MCand P>ATC. b P>MCand P=Ā ATC c.P=Ā MCand P>Ā ATC d.P=Ā MCand P=Ā ATCarrow_forwardIn the long run, perfectly competitive firms are at equilibrium when: (LMC = Long-Run Marginal Cost; LAC = Long-Run Average Cost) a.P = LAC > LMC b.P = LMC = LAC. c.P = LMC > LAC d.P = MR.arrow_forward
- Explain the fact that the short-run supply curve for a price taking firm is that segment of its marginal cost (MC) curvethat lies above the average variable cost curve?arrow_forwarda. 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.Ā b. Does a competitive firmās price equal its marginal cost in the short run, in the long run, or both? Explain.arrow_forwardDraw 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.arrow_forward
- In the longā run, firms in a competitive marketA.earn positive accountingā 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 accountingā profit, but positive economic profit.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 itsĀ Ā priceĀ at ____ and produce ____Ā Ā units. Ā Ā $4; 40 Ā Ā $6; 40 Ā Ā $6; 55 Ā Ā $6; 30arrow_forwardIllustrate short run profit maximization scenerio of a competitive firm in case of loss.arrow_forward
- a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runĀ abnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm AāsĀ payoff/Firm Bās payoff)Firm BFirm APrice Ā£2 Price Ā£1Price Ā£2 Ā£20,000/Ā£20,000 Ā£10,000/Ā£24,000Price Ā£1 Ā£24,000/Ā£10,000 Ā£12,000/Ā£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a āmaximinā strategy?ii) What is your payoff for a āmaximaxā strategy?iii) Does a dominant strategy exist within this prisonersā dilemma?arrow_forwardexplain the down-sloping and upsloping long run ATC. Why may pure competition earn economic profits in the short run but not in the long run?arrow_forwardThe 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 Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 2) If the market for developer is perfectly competitive, what quantity will be produced? What price will be charged? What will the firmās profit be? Write a sentence explaining how you determined each of those three answearrow_forward
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