Microeconomics, Student Value Edition (2nd Edition)
2nd Edition
ISBN: 9780134461786
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 6, Problem 7P
(a)
To determine
Fixed and marginal cost for producing 1 unit.
(b)
To determine
Short-run
(c)
To determine
Long-run prices when firms are free to enter and exit
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Students have asked these similar questions
A perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity produced, how much does the firm produce? Why?
Assuming perfect competition, there is not enough information to determine how much the firm is producing.
Assuming perfect competition, the firm is producing where MC is twice MR. If the price is $20, then MC is $40. This means that the firm is producing 10 units.
Assuming perfect competition, the firm is producing where MR = MC. If the price is $20 and MC is four times the quantity, it is producing 80 units.
Assuming perfect competition, the firm is producing where MR = MC = P. Since price is $20, MR is $20. If MC is 4 times the quantity, it is producing 5 units.
Assume demand is D1 and the industry is in long-run equilibrium. How many firms are in the industry? When demand shifts from D1 to D2, the price changes ["less", "more"] in the short run than in the long run, and quantity changes ["more", "less"] in the short run than in the long run:
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Under conditions of perfect or pure competition, or close to those conditions, producers (firms) are what are called “price takers”. This means that the price for the product that they are selling is determined by the market. No matter how little or how much product they supply, they can sell all they want at that price. If they were to price their product higher, they will sell zero. Which of the following is true?
The price is equal to marginal revenue but not average revenue
The price is equal to marginal revenue and average revenue
The price is equal to average revenue but is not equal to marginal revenue
The price is above both marginal revenue and average revenue
Chapter 6 Solutions
Microeconomics, Student Value Edition (2nd Edition)
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Similar questions
- In perfectly competitive markets, the market long-run supply curve is: downward sloping if the average costs for all firms fall as the industry expands downward sloping in quantity if there are diseconomies of scale always horizontal upward sloping for firms with large fixed cost none of the other answers are correct Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardShort-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.arrow_forwardExplain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is on the rise. People often believe that large firms in an industry have cost advantages over small firms in the same industry. For example, they might think a big oil company has a cost advantage over a small oil company. For this to be true, what condition must exist? Explain your answer.arrow_forward
- What 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_forward“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?arrow_forwardWhen economists talk about a barrier to entry, they are referring to a.the downward-sloping portion of the long-run average total cost curve. b.a factor that makes it difficult for potential competitors to enter a market. c.the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. d.the declining output experienced as additional units of a variable input are used with a given amount of a fixed input.arrow_forward
- THIS IS WRONG!!! THIS IS THE SAME SOLUTION PROVIDED AS BEFORE (EXACT COPY AND PASTE). PLEASE PROVIDE A CORRECT SOLUTION. THE CORRECT ANSWERS ARE: Long-run quantity = 39 Long-run intercept = 158 Long-run price = 119 Long-run profits = 0arrow_forwardSuppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the producers in the corn production industry were price takers, what would happen to the following? a. the price of corn b. the profitability of corn farmers who quickly adopt the new technology c. the profitability of corn farmers who are slow to adopt the new technology d. the price of soybeans, a substitute product for cornarrow_forwardWhich of the following best applies to the distinction between the "long run" and the "short run"? The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. All of these statements are correct.arrow_forward
- If the minimum efficient scale of a firm is small relative to the demand for the good, then__. Select one: a. firms have a minimum efficiency and could do better by producing more. b. many small firms can enter the market. c. there will be no economic profits for any small firms, so no new firms will enter. d. several large firms will enter the market thereby reducing competition.arrow_forwardThe market price a perfectly competitive firm has to take is pm and the total cost to the firm is TC(Q)=aq+Bq2 +y , where y is fixed cost of the firm . Find the optimal output to the firm in terms of market price pm. Express also maximum profit. How does maximum profit depend on the market price and the level of fixed cost? All parameters are assumed to be positive.?arrow_forwardThere are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allows ABC to offer large quantities at favorable prices. a. ABC gained market power through a.economies of scale b.government protection c.control of an important input . b. ABC’s market power a.does b.does not guarantee that the firm makes an economic profit.arrow_forward
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