MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
2nd Edition
ISBN: 9780134519517
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 6, Problem 11Q
To determine
The effect on firm’s
(a) When the product demand increases.
(b) When the firm’s marginal cost increases.
(c) When the market
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Which statement best describes the equilibrium in a perfectly competitive market
A. Firms' average and marginal revenues are equal
B. The market price equals the marginal cost of production for all firms
C. The average cost equals the marginal cost of production for all firms
D. The average cost of production equals firms' marginal revenue
Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.
Suppose the government imposes an excise tax on the production of a good produced in a perfectly competitive market that was in long run equilibrium. Draw side by side market and firm graphs showing the short run impact on the firm and the market.
Chapter 6 Solutions
MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
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- In a purely competitive market at its long-run equilibrium, which of the following is not true? a The marginal benefit of the last unit of the product equals the marginal cost of producing that unit. b The maximum willingness of buyers to pay for the last unit of the product equals the minimum acceptable price for the seller of that unit. c Price equals marginal cost, and they are equal to the lowest attainable average cost of production. d The combined amount of consumer and producer surpluses is at its minimum possible.arrow_forwardConsider a perfectly competitive market characterized by a market supply equal to QS=32*P and a market demand equal to QD=400-8*P. What is the market equilibrium quantity?arrow_forwardWhich market offers higher consumer surplus and why? The perfectly competitive firm or the monopoly firm?arrow_forward
- Suppose a perfectly competitive market has 50 firms, each with supply curve P=50+100Q. The market demand curve is given by P=650-4Q. How much is the individual firm's producer surplus in the short run? a. 400, b. 250, c. 200, d.100arrow_forwardWhich of the following is a reason why firms in a perfectly competitive market have no influence over price? a.Buyers and sellers lack perfect information about the product and pricing. b.All firms in the market sell identical products. c.Barriers exist to enter the market. d.There are many sellers that produce similar, but not identical, products..arrow_forwardSuppose the equilibrium price of a good in a perfectly competitive market is $15. A firm in the market decides to charge $20 for the good. Which of the following will happen? a. The firm's profit will increase. b. The firm will capture the entire market. c. The firm will not be able to sell any output. d. The firm's revenue will increase.arrow_forward
- As the only producer in the apple market, at what price, how many apples would Alex sell per week in order to maximize his economic profit? Calculate his producer surplus.arrow_forwardDo you agree with the following statement? Give reasons with a complete explanation for your answer. Production possibilities frontiers can shift upwards without an increase in resources. The demand for a commodity increase when the price of its substitute increases. The income elasticity of the demand for luxury goods is always positive. Under perfect competition, a firm fix its price where its AR=MRarrow_forwardIn graph A below shows the market demand and supply in a competitive market, and graph B shows the cost curves of a representative firm in that industry. a. What are the market equilibrium price and quantity? Equilibrium price: $ Quantity traded:b. At equilibrium, what quantity is the firm producing? What is its total profit or loss? Leave no cells blank - be certain to enter "0" wherever required. Quantity: Total profit or loss $arrow_forward
- How to find the inverse demand equation faced by a perfectly competitive market?arrow_forwardConsider the market for wheat which is a perfectly competitive market. Is the market demand curve the same as the demand curve facing an individual producer? If not, explain how and why they are different.arrow_forwardAll buyers in a perfectly competitive market set prices to compete in their market? is it true or falsearrow_forward
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