Does a competitive firm’s price equal its marginalcost in the short run, in the long run, or both?Explain.

Q: Can excess profit be earned in this industry in the long run?

A: Excess profit means an amount of profit which is higher than the total cost incurred in production.

Q: How is it possible for perfectly competitive firms to maximize profit in the short run versus in the…

A: Perfect competition: Under the perfect competition market, the price is decided by the demand and…

Q: How would you describe the demand curve for the purely competitive firm? For the industry?

A: Purely competitive firms are characterised by being price takers where decisions are made…

Q: Consider the perfectly competitive market for tofu. Many people use tofu as a substitute for meat.…

A: A perfect market, also known as an atomistic market in economics, is defined by multiple idealizing…

Q: Explain the fact that the short-run supply curve for a price taking firm is that segment of its…

A: The individual supply curve of short-run is the marginal cost of an individual at all of the points…

Q: • Please explain the difference between the short run and long run equilibrium under a per- fectly…

A: Perfect competition is the market structure which is characterized by a large number of firms with…

Q: When will a firm enter a competitive market?

A: Perfect competition refers to the situation where there are large number of prouder and consumers…

Q: Suppose that the market for black sweaters is a competitive market. The following graph shows the…

A: Profit maximization occurs at the point where the marginal revenue and marginal cost are equal.…

Q: What is the value of the average cost?   If the price in the market of the perfect competitive firm…

A: Profit maximizing quantity is where marginal revenue equals marginal cost.

Q: In the long run, perfectly competitive firms make zero economic profit. If this is the case, why…

A: When a company's economic profit is zero, it is in a state of normal profit, which is why normal…

Q: Why will profits for firms in a perfectly competitive industry tend to vanish in the long run?

A: Perfectly competitive markets are the one's where there are multiple buyers and sellers, products…

Q: If the price of a product produced by a perfectly competitive firm falls below the average total…

A: Perfect competition refers to the situation where there are many buyers and sellers exist in the…

Q: Faced with rising costs , when should a firm choose to shut down , for example in (a)in the short…

A: a) In the short run, there are three possibilities. If price/average revenue > average variable…

Q: The graph shows the cost curves for a perfectly competitive firm. If the market price of the product…

A: A perfectly competitive market is where there are large number of buyers and sellers. The price of…

Q: an excess profit be earned in perfectly competitive markets in the long run. Explain.

A: Perfect competition refers to the market where there is large number of buyers and sellers who deal…

Q: At what point would a competitive firm shut down in the short run

A: A competitive firm is a price taker, which means the firm takes the price determined by the market…

Q: List the requirements for a perfectly competitive goods market.

A: For a particular production process, there has to be some factors of production available. For…

Q: Why is a firm in a perfectly competitive market called a price taker? How does a firm in perfect…

A: Price taker: It means a person or company accepting the prevailing prices in the market and unable…

Q: If a firm makes zero economic profit, it will exit the market in the long run. Do you agree?…

A: No economic profit is also referred as normal profit. Economic profit is calculated by subtracting…

Q: If the price is given what is the formula equation to fiqure what the maximum profit is for a…

A: In a perfectly competitive market, when the price is equal to the marginal revenue and the marginal…

Q: The accompanying graph depicts the cost curves of an individual firm in a perfectly (or purely)…

A: In perfectly competitive market, price is constant and equal to marginal revenue. At profit…

Q: Describe how we can identify a competitive firm’s short-run supply curve.

A: In a monetary market all production continuously happens in the short run. The short run is the…

Q: Why are firms called price takers in a perfectly competitive market? Why do different firms produce…

A: A perfectly competitive firm is known as a price taker, because the pressure of competing firms…

Q: Economics Explain (in detail with example) three assumptions for the perfectly competitive market.

A: Perfect competition is a type of market structure in which there are large number of buyers and…

Q: Suppose that a firm sells its output in a perfectly competitive output market. If the price at which…

A: Perfect competition refers to the situation where there are large number of prouder and consumers…

Q: 140 123.33 90 56.67 Price 100 133.33 -MR MC ATC Demand Quantity

A: Here, the given graph shows the revenue, demand, and cost curves of a firm.

Q: Suppose the book-printing industry is a competitive market, and it begins with a long run…

A: There are two possibilities, since you did not mention if the firm is incurring profit or loss in…

Q: Does a competitive firm’s price equal the minimumof its average total cost in the short run, in the…

A: A perfect competition(PC) market is one with many consumers and sellers producing identical…

Q: “That segment of a competitive firm’s marginal-cost curve that lies above its average-variable-cost…

A:

Q: Suppose the market for com is perfectly competitive. The average total cost and marginal cost of…

A: Perfect competition is a type of market structure in which there are large number of buyers and…

Q: You witnessed new firms entering a competitive market. What can you infer for the existing firms in…

A: In a market, new firms generally enter if they can see an incentive to generate profit and it is the…

Q: 7.3.2 According to the figure below, a firm would shut down in the short run if the price is Price…

A: The shut down price is the minimum price a firm requires remaining open in the short run. That is, a…

Q: A single firm in a perfectly competitive market is relatively small compared to the rest of the…

A: In the ‘perfect competition(PC)’ all firms sell ‘identical products’ that are homogeneous. Here all…

Q: What is the shape of the demand curve faced by the perfectly competitive firm? Explain your answer…

A: Perfect competition is the type of market structure in which there are many buyers and sellers of a…

Q: Explain how the profit-maximizing rule of setting P = MC leads a perfectly competitive market to be…

A: In a perfectly competitive market, there are large number of buyers and sellers in the market…

Q: What is the short run Supply Curve for a competitive firm?

A: In perfect competition, the short-run supply curve is the marginal cost curve (MC) at and below the…

Q: The market supply curve in a perfectly competitive market is typically?

A: A firm in a perfectly competitive market is a price taker. It has a supply curve which is the rising…

Q: Suppose that the market for dress shirts is a competitive market. The following graph shows the…

A: Perfect competition refers to the situation where there is the large number of sellers and buyers…

Q: Lisette owns a bakery. If she expands the size of her bakery but her average total cost of producing…

A: Here, Lisette being the owner of the bakery shop experiences constant returns to scale.

Q: c) Under what conditions will a firm shut down in the short run? Provide two plausible real world…

A: The firms, and organizations are viewed as significant for the legitimate working of the markets.…

Q: What are the characteristics needed for a perfectly competitive market?

A: In a perfect competitive market, there is a number of buyers and sellers, selling similar products.…

Q: How would you draw a firm graph from a perfectly competitive constant cost market in the short run…

A: A constant cost market means that the cost in the industry remains constant. This is due the feature…