Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 15, Problem 8MCQ
To determine
Among the given options, selecting the option that does not fit for
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Perfect 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 its price at ____ and produce ____ units.
$4; 40
$6; 40
$6; 55
$6; 30
5. Which of the following are elements for markets that resemble perfect competition?a. flat demand curves; easy exit; easy entryb. steep demand curves; difficult exit; easy entryc. flat supply curves; easy exit; difficult entryd. steep supply curves; difficult exit; difficult entry
Show the competitive firm in long run equilibrium and describe productive and allocative efficiency. Demonstrate what happens to equilibrium price and quantity with an increase in market demand. Can the firm make economic profit in the short run? What about the long run?
Chapter 15 Solutions
Foundations of Economics (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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- #4. Agriculture in india is mostly characterized by perfectly competitive market why? Short answer quicklyarrow_forwardWhich of the below changes in demand in the long-run would lead to entry in the perfectly competitive market for wheat? a. a decrease in the number of buyers b. a decrease in buyers' expected price of wheat c. an increase in income (wheat is a normal good) d. both a) and b) would lead to long-run entry in perfect competitionarrow_forwardUnder perfect competition, which of the following are the same (equal) at all levels of output? a. Price and marginal cost b. Price and marginal revenue c. Marginal cost and Marginal revenue d. All of the above answers are correct.arrow_forward
- True or false b. Charging a price greater than marginal cost leads to maximum efficiency c. In reality, few markets are perfectly competitive, and some loss of economic efficiency occurs in most markets d. Most markets are perfectly competitive and economists have found that there is no loss of economic efficiency in the U.S. economy.arrow_forward(11) Capital is a factor of production that has been produced for use in the production of other goods and services. Which of the following is an example of capital? Select one: a. money b. airports c. lumber (12) Which of the following are conditions of perfect competition? Select one: a. All firms sell identical products. b. There are few buyers and sellers c. Consumers have little relevant information to make rational buying decisions.arrow_forwardchange the questions or use different values? Question 1. In competitive markets, there are many small firms with each firm unable to influence the market price. Suppose company ABX operates in the wheat market. The company produces and markets wheats at a Price = $20 per container. The firm’s total costs are given as: TC = 50 +2Q + 3Q2 What is the firm’s demand curve? Show it on a graph and label the axes showing P and Qarrow_forward
- Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.arrow_forwardmultiple choice Assume that the tuna fishing industry is perfectly competitive. Which of the following best characterizes the industry if, as demand for tuna increases, fishing boats have to go farther into the ocean to harvest tuna? 1- a constant-cost industry 2- a fixed-cost industry 3- a decreasing-cost industry 4- an increasing-cost industryarrow_forwardANSWER IF TRUE OR FALSE: no need for long explanation. 1. The welfare of the consumers is maximized under a purely competitive market. 2. It is easy to exit or stop production if the market condition is no longer profitable if there is very low investment in fixed assets. 3. Patents and copyrights serve as barriers in entering an industry and in competing against the already existing producers.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-run 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 A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?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 2) If the market for developer is perfectly competitive, what quantity will be produced? What price will be charged? What will the firm’s profit be? Write a sentence explaining how you determined each of those three answearrow_forwardShow all the work clear handwriting Suppose the market price of a good is $20 and TC=0.5Q2. A. What Q should a profit maximizing perfectly competitive firm choose? B. What are profits? C. Draw a graph that shows the short run choice of Q, revenue and profits.arrow_forward
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