Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 24, Problem 3E
To determine
To explain:
The reasons for a firm will continue to produce at a price less than the average cost in the short run.
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Give an example of a price at which this firm would want to produce and sell output in the short run, but not in the long run.
What does zero economic profits in the long-run mean to the owner of a business operating in a perfect competitive market?
The correct answer to whether it should be produced is that the firm should produce in the short term if it can either make a profit or a loss less than its total costs.
True or false
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Similar questions
- 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?arrow_forwardIn the long-run equilibrium, what is the price? what is the output? what is the total profit?arrow_forwardFor each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?arrow_forward
- In the short run, the firm should continue to produce if and only if a.Price exceeds average total cost. b.Price exceeds average fixed cost. c.Price exceeds average variable cost. d.Marginal revenue equals marginal cost. e.Price exceeds marginal cost.arrow_forwardWhat quantity will the firm produce if it shuts down in the short run? What will be the profits if this firm shuts down? What quantity will the firm produce to minimize losses in the short run? If this firm chooses to operate at a loss, what will its profits equal? If the cost and revenue numbers in the table will continue permanently, what will this firm choose to do?arrow_forwardFor a perfectly competitive firm to operate and produce an output level in the short-run, the firm's Price must be greater than, or equal to, what cost for the firm?arrow_forward
- If new technology in a perfectly competitive market brings about a substantial reduction in costs of production,how will this affect the market?arrow_forwardEconomics At a price of $21 will the firm produce in the short run? If so, what is the profit or loss? Same questions as #1 except use a price of $34? Same questions as #1, except use a price of $45? From the information in the table, can you determine the short run supply curve? If so, what would it be? What would happen at the $45 price level in the long run, to profits, price, number of firms in the industry, assuming constant costs?arrow_forwardThis company wants to maximize its profit in the short run. How much is a profit-maximizing quantity and price in the short run? Why? How much is its profit at that profit-maximizing quantity?arrow_forward
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