![EBK FOUNDATIONS OF ECONOMICS](https://www.bartleby.com/isbn_cover_images/8220103632225/8220103632225_largeCoverImage.jpg)
EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 7IAPA
To determine
The price at which firm would temporarily shut down, the market price of toys in long run and the number of toys producing firms in long run is to be determined.
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
Figure 1 shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and Table 1 shows the market demand schedule for toys. At what market prices would the firm shut down temporarily? What is the market price of a toy in long-run equilibrium? How many firms will be in the toy market in the long run? Explain your answer.
The diagram above represents a perfectly competitive firm that faces a demand curve d. Answer the following questions. Show all calculations.
From the diagram, how many units should this firm produce to maximize profit?
From the diagram data, calculate the firm’s total profit.
Assuming no changes in the costs of production, in the long run how much will this firm produce and at what price?
From the diagram, at what price will this firm break even?
From the diagram, at what price should this firm shut down?
Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands, which sell for $10 each. At this level of output, the marginal cost is $10 and the average variable cost is $12. Should the firm increase output, decrease output, or not produce? Explain why?
Chapter 15 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 15 - Prob. 1SPPACh. 15 - Prob. 2SPPACh. 15 - Prob. 3SPPACh. 15 - Prob. 4SPPACh. 15 - Prob. 5SPPACh. 15 - Prob. 6SPPACh. 15 - Prob. 7SPPACh. 15 - Prob. 8SPPACh. 15 - Prob. 9SPPACh. 15 - Prob. 10SPPA
Ch. 15 - Prob. 11SPPACh. 15 - Prob. 1IAPACh. 15 - Prob. 2IAPACh. 15 - Prob. 3IAPACh. 15 - Prob. 4IAPACh. 15 - Prob. 5IAPACh. 15 - Prob. 6IAPACh. 15 - Prob. 7IAPACh. 15 - Prob. 8IAPACh. 15 - Prob. 9IAPACh. 15 - Prob. 10IAPACh. 15 - Prob. 11IAPACh. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQ
Knowledge Booster
Similar questions
- b). The Philadelphia water ice industry is a constant cost industry. The demand for water ice shifts outward each year when it gets hot. What are the steps by which the competitive water ice market insures an increased amount of water ice. Explain and graph at the industry and firm levels. What is the long-run price of water ice?arrow_forwardUse a graph to demonstrate the scenario where a competitive firm would be earning positive profit in the short run. Can this scenario be maintained in the long run? Why? What are the ‘shutdown point’ and ‘break even point’ of a competitive firm . Explain with diagram. A competitive market starts in a situation of long run equilibrium. Then there is an increase in demand. Explain what happens in the short run and long run, using necessary diagrams.arrow_forwardDraw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm's total revenue and total costs.arrow_forward
- Suppose the shirts industry is perfectly competitive and begins in a long-run equilibrium. (a) Pluto Company invents a new production process that reduces the production cost. What happens to Pluto Company’s profits and the price of shirts in the short run when Pluto Company’s patent prevents other firms from using the new technology? (b) What happens in the long run when the patent expires and other firms are free to use the technology?arrow_forwardIf a firm's total revenue is $100, it's total cost is $130, and its total fixed cost is $40. Should the firm stay in business? Explain. How does a firm in perfect competition determine its outputs to produce? Why will the firm not produce this level of output? Explain.arrow_forwardThe industry in the figure below consists of many firms with identical cost structures, and the industry experiences constant returns to scale. Consider a change in demand from D₁ to D₂, which increases price from $20 to $30 in the short run. Price (S) 50 40- 30- 20 10- 0 10 20 Market 30 B Quantity reset D 40 5 50 LRS 1 S₂ Instructions: Round your answers to the nearest whole number. a. Draw the new supply line that occurs after the market adjustments take place. Instructions: Use the tool provided (S₂) and plot only the endpoints. The new equilibrium price will be $ b. Draw the long-run supply curve. Instructions: Use the tool provided (LRS) and plot only the endpoints over the entire range of output (0 - 60). and the new equilibrium quantity will bearrow_forward
- Tomato 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 $34.50 a bushel. Should the firm increase output, decrease output, or not produce? Explain.arrow_forwardThe let graph shows the world market for wheat. The right graph shows the cost curves and the marginal revenue curve of an individual wheat farmer at the initial long-run equilibrium The world population increases. In the left graph, draw the new demand curve. Label it Draw the market supply curve that returns the wheat market to its long-run equilibrium. Label it Draw a point to show the new long-run equilibrium price and quantity In the right graph, draw a point to show the firm's price and quantity in the long run >>>Draw only the objects specified in the question 16 124 Price (dollars per bushel) 10 P₁ 05 10 15 20 25 30 35 40 Quantity (bons of bushels per year) C Price and cost (dollars per bushel) 20 MC 10 ATC 124 M 10 MAR 200 650 100 150 200 250 300 350 400 Quantity (thousands of bushels per year) 0 a 3arrow_forwardThe figure depicts the demand curve of a firm producing cars, together with its marginal cost, average cost, and isoprofit curves. Based on this figure, which of the following statements are correct? 8,000 Price, Marginal cost ($) 0 E Quantity of cars, Q At A, the firm makes positive profits. The firm makes the same profit at B and D. O Profit margin is the same at B and D. O The slope of the isoprofit is zero at D. MC Isoprofit A Isoprofit B AC 100arrow_forward
- Under perfect competition, each firm is a price taker. Suppose a single seller in the wheat market. The company produces and markets wheats at a Price = $38 per container. The firm’s total costs are given as: TC = 10 +2Q + 3Q2 Week 8 Chapter 8: Managing in Competitive Markets For this week read Chapter 8 INSTRUCTIONS: 1. Answer the following questions and explain your work. 2. Do not attach any other pages. 3. Download, write your answers on this same Question sheet; next, to each question. 4. Don’t write your name 5. Upload in the same drop box for the purpose of making comments 6. Don’t change the questions or use different values? Question Under perfect competition, each firm is a price taker. Suppose a single seller in the wheat market. The company produces and markets wheats at a Price = $38 per container. The firm’s total costs are given as: TC = 10 +2Q + 3Q2 a) Find the Firm’s marginal cost? Show your steps, including graphs. Review additional…arrow_forwardDistinguish the difference between the market demand curve and the demand curve that a particular firm in the industry faces. Why are the two curves different?arrow_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_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
![Text book image](https://www.bartleby.com/isbn_cover_images/9781285859460/9781285859460_smallCoverImage.gif)