Foundations of Economics, Student Value Edition (8th Edition)
8th Edition
ISBN: 9780134489230
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 15, Problem 8IAPA
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To explain:
The graph of the U.S. strawberry market in long run equilibrium before the pollution crackdown and the short run effects of pollution crackdown.
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Q. Suppose the book-printing industry is competitive and begins in long-run equilibrium.
a. Draw a diagram describing the typical firm in the industry.
b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing
books. What happens to Hi-Tech’s profits and the price of books in the short run when
Hi-Tech’s patent prevents other firms from using new technology?
c. What happens in the long run when the patent expires and other firms are free to use the technology?
Doug's Donut Shop operates in a competitive market and is currently producing 200 donuts. He has average revenue of $1.50, his average total cost is $1, and his total fixed costs are $30. Does Doug have profits or losses?Select one:a. losses of $300.b. losses of $100.c. profits of $200.d. profits of $100.
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.
Chapter 15 Solutions
Foundations of Economics, Student Value Edition (8th Edition)
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
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- Galaxy is a firm in perfectly competitive market. Galaxy currently produces and sells 400 units of toys. Its total revenue is $4,000; the marginal cost of producing the last toy is $12; and the average total cost of producing the the last toy is $8. Is the Galaxy maximizing its profit, or should it increase or decrease output in order to increase its profit? Explain to get full credit.arrow_forwardQuestion 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units. Question 6.6. A firm should increase the quantity of output as long as its marginal revenue is greater than its marginal cost. marginal cost is greater than its marginal revenue. average revenue is greater than its average total cost. average revenue is greater than its average variable cost. Question 7.7. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is equal to the price. less than the price. greater than the price. equal to the average cost. Question 8.8. The classic…arrow_forward10. Timmy's Trophies operates in a perfectly competitive market. If trophies sell for $20 each and average total cost per trophy is $15 at the profit-maximizing output level, then in the long run Group of answer choices more firms will enter the market. some firms will exit from the market. the equilibrium price per trophy will rise. average total costs will fall.arrow_forward
- Basti’s Coffee operates in a competitive market. The short run price in the coffee market is equal toBasti’s Coffee average variable cost.a. Using two correctly labeled graphs show the coffee market side by side with Basti’s Coffee. Clearlyindicate which graph represents the market and which represents Basti’s Coffee. In your graph identify:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffee iii. The area of economic profit or loss for Basti’s Coffeeb. In a new set of graphs for both the market and Basti’s Coffee, show the long run adjustments in eachof the following:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffeearrow_forwardThe packaged milk market in Pakistan is perfectly competitive. Some firms in the market are making profit, others are having losses. Draw and explain graphs showing MC, ATC, MR, AR, price and quantity of output to illustrate these situations. If firms can enter and exit the packaged milk market in the long run but not in the short run, show how a decrease in demand due to lower incomes of Pakistani consumers during COVID Pandemic affects price and profitability.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
- Question 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units.arrow_forwardQuestion 1: Assume that apples are produced in a perfectly competitive market. Columbia’s Orchard is a typical firm that grows and sells apples. Currently, Columbia earns zero economic profit, and the market price of apples is $10 per basket. Draw a correctly labeled graph showing Columbia’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled Qc. Answer: 2. Suppose an increase in the popularity of apple, the demand for apple increases. How will the increase in the demand for apples affect Columbia’s economic profit in the short run? Explain. Answer: 3. What will happen to Columbia’s economic profit in the long run? Explain. Answer:arrow_forwardSuppose the book-printing industry is competitive and begins in a long-runequilibrium.a. Draw a diagram showing the average total cost, marginal cost, marginal revenue,and supply curve of the typical firm in the industry.b. Hi-Tech Printing Company invents a new process that sharply reduces the cost ofprinting books. What happens to Hi-Tech’s profits and to the price of books in theshort run when Hi-Tech’s patent prevents other firms from using the new technology?c. What happens in the long run when the patent expires and other firms are free touse the technology?arrow_forward
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