ECON.PRIVATE/PUBLIC CHOICE >CUSTOM PKG<
16th Edition
ISBN: 9781337692373
Author: Gwartney
Publisher: CENGAGE C
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Question
Chapter 22, Problem 10CQ
To determine
The profit earned by a firm in a price taker market.
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You witnessed new firms entering a competitive market. What can you infer for the existing firms in that market?
In the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?
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What price should the firm charge for its output?
For that price and quantity does the firm make economic profit, economic loss or breaks even? How do you know? Explain your answer.
Chapter 22 Solutions
ECON.PRIVATE/PUBLIC CHOICE >CUSTOM PKG<
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- What does zero economic profits in the long-run mean to the owner of a business operating in a perfect competitive market?arrow_forwardDoes a competitive firm’s price equal its marginal cost in the short run?arrow_forwardIn a long-run equilibrium in a perfectly competitive market, firms earn positive economic profits. Is this true?arrow_forward
- “In a perfectly competitive market, firms always operate at the lowest per-unit cost." Is the preceding statement true or false? Explain your answer.arrow_forwardIf a competitive firm finds that its average variable cost is decreasing at its current profit maximizing quantity, should the firm increase or decrease output?arrow_forwardA perfectly competitive firm will maximize its profit when marginal revenue is greater than marginal cost. True or False?arrow_forward
- If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explainarrow_forwardExplain 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_forward
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