Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 4.1, Problem 1QQ
To determine
Market and perfect competitive market.
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We expect that firms in perfectly competitive markets can earn higher economic profits in the short run but will only earn normal profit in the long run.
1. Business owners would prefer to earn higher economy profits. Why do economists consider it inefficient when firms earn above normal profit?
2. Why do economists consider it inefficient when firms earn less than normal profit?
H3.
In a perfectly competitive market, a firm’s production in the market described as Q = f(X) = 5X0.5 , where the final product of that firm per unit $20 and the raw material of that product per unit $5.
a- much raw material will use by the firm to maximize the profit?
b-How much final product will produce by the firm?
c-What will be the firm’s profit
1a)Why do we argue that in the long run, perfect competition will result in efficiency? How is this related to the concept of normal profits and firm entry and exit from markets?
1)bIn economics, we argue that the demand curve in competitive markets is where Px = MUx, ceteris paribus. Explain using sentences and words, what this idea means.
Chapter 4 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 4.1 - Prob. 1QQCh. 4.2 - Prob. 2QQCh. 4.3 - Prob. 3QQCh. 4.4 - Prob. 4QQCh. 4 - Prob. 1CQQCh. 4 - Prob. 2CQQCh. 4 - Prob. 3CQQCh. 4 - Prob. 4CQQCh. 4 - Prob. 5CQQCh. 4 - Prob. 6CQQ
Ch. 4 - Prob. 1QRCh. 4 - Prob. 2QRCh. 4 - Prob. 3QRCh. 4 - Prob. 4QRCh. 4 - Prob. 5QRCh. 4 - Prob. 6QRCh. 4 - Prob. 7QRCh. 4 - Prob. 8QRCh. 4 - Prob. 9QRCh. 4 - Prob. 1PACh. 4 - Prob. 2PACh. 4 - Consider the market for minivans. For each of the...Ch. 4 - Prob. 4PACh. 4 - Prob. 5PACh. 4 - Prob. 6PACh. 4 - Prob. 7PACh. 4 - Prob. 8PACh. 4 - Prob. 9PACh. 4 - Prob. 10PACh. 4 - Prob. 11PA
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- Give typing answer with explanation and conclusion Which of the following characteristic(s) does not describe a competitive market? 1. A market where firms can freely enter or exit the market. 2. A market where firms sell a differentiated product. 3. A market with few buyers and sellers. 4. A market where firms sell a nearly identical product. Choices A.2 and 3 B.1, 2 and 3 C.1, 3, and 4arrow_forwardProductive efficiency and allocative efficiency are two concepts achieved in the long mm in a perfectly competitive market. These are the two reasons why we call them perfect. How would you use these two concepts to analyze other market structures and label them imperfect?arrow_forwardCan you name five examples of perfectly competitive markets? Why or why not?arrow_forward
- Finding a life partner is a complicated process that may take many years. It is hard to think of this process as being part of a very complex market, with a demand and a supply for partners. Think about how this market works and some of its characteristics, such as search costs. Would you consider it a perfectly competitive market?arrow_forwardWill a perfectly competitive market display allocative efficiency? Why or why not?arrow_forwardA firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?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_forward4. Examine the behavior of perfect competitive markets. How are prices determined in competitive markets? How does competition affect the profits of a firm or industry? What does society gain from market competition?arrow_forwarda) Imagine that the price of input 1 is $16 per unit, the price of input 2 is $25 per unit, and the firm has fixed costs of $60. The firm is in a competitive market where the market price is $240 per unit of output. How much should the firm produce? How much profit does the firm make?arrow_forward
- Is the market for Kennedy half dollars competitive? Also why or why don't you think this market is a perfectly competitive market?arrow_forwardWhat is a market? What are the characteristics of a perfectly competitive market?arrow_forwardGraph represents the cost structure of an individual firm in a perfectly competitive market. If the price decreases to $25, Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium?arrow_forward
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