ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 8, Problem 1.2PA
To determine
The features of
Introduction:
Perfect competition: It is a form of the market structure in which there are large number of buyers and sellers which sells homogenous product at uniform price which is determined by the industry.
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(What’s So Perfect About Perfect Competition) Use thefollowing data to answer the questions.Marginal MarginalQuantity Cost Benefit0 — —1 $ 2 $102 $ 3 $ 93 $ 4 $ 84 $ 5 $ 75 $ 6 $ 66 $ 8 $ 57 $10 $ 48 $12 $ 3a. For the product shown, assume that the minimum pointof each firm’s average variable cost curve is at $2. Construct a demand and supply diagram for the product andindicate the equilibrium price and quantity.b. on the graph, label the area of consumer surplus as f.Label the area of producer surplus as g.c. If the equilibrium price were $2, what would be theamount of producer surplus?
Question 3
Concept: Revenue of a Firm
Farmer Jones grows oranges in Florida. Suppose the market for oranges is perfectly competitive and that the market price for a crate of oranges is $11 per crate.
Fill in total revenue, average revenue, and marginal revenue in the table below. (Enter your responses as integers.)
Average
Marginal
Revenue
Crates of
Market Price
Total Revenue
Revenue
(per crate)
$11
Oranges
(TR)
(AR)
(MR)
$
1
11
$
$
2
11
3
11
4
11
5
11
Chapter 8 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
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- 1.(a) Explain with the help of a graph how a perfectly competitive firm determines its profit-maximizing quantity of output. (b) Explain with the help of a graph the effect of a decrease in marginalcost on the profit-maximizing quantity of output of a perfectly competitive firm.arrow_forwardRevenue and cost (dollars per unit) MC AVC 50 40 30 20 10 10 20 30 40 50 Output (units per day) The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should Select one: a. produce 30 units. b. produce more than 30 units and less than 40 units. c. produce 40 units. d. shut down. e. produce more than 10 and less than 30 units.arrow_forwardMy dear good expert hand written not allowed.arrow_forward
- (Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn?Possible solutions a profit of $80 a loss of $30 a profit of $200arrow_forwardTyped plz and asap thanks please give quality solutionarrow_forwardShort answer questions a) What are the differences between short run and long run in a competitive market? Note at least two differences with brief descriptions. b) Why do firms under competition have 0 profit in long run? Please give a proper explanation following class notes.arrow_forward
- You are advised to promote perfectly competitive firms in the industry, what would be your arguments. (In terms of main features, profit maximization, loss minimization, etc.) Use diagram.arrow_forwardM/c question - Micro 29) What is a characteristic of a perfectly competitive market? A. Goods offered for sale are largely the same B. There are not many sellers in the market C. Firms have difficulty entering the market D. Firms are price setters 28) Refer to Table 14-2. At which quantity of output is marginal revenue equal to marginal cost? A. 8 B. 4 C. 6 D. 2arrow_forwardrt Draw Design Layout References Mailings Review View Help Sh 3. Name: 1. Perfect Competition: What are the key features of a perfectly competitive market? b. Will a perfectly competitive firm automatically close its doors if it is not making a profit? Why or why not? Make sure to discuss the different time frames. a. C. Suppose that you are the manager of a company that vaccinates human beings for biological diseases. Your company uses two inputs to produce vaccinations: physicians and laboratories. However, this is a short-run analysis where physicians are variable but laboratories are fixed. Suppose that each physician costs $500 per day (for an annual salary of about $175,000) and the daily cost for the laboratory is $1,500 (for rental cost of about $547,500 per year). In the short run, your company has 1 laboratory. The following table presents potential daily production levels with requisite input combinations. Physicians Laboratories Vaccinations (Q) TC| TFC | TVC MC ATC AFC AVC…arrow_forward
- Question: Perfect competition results in an efficient allocation of resources. True Falsearrow_forward(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…arrow_forward1.Define the perfect competition market structure. 2.what are the characteristics of that market? 3.How many firms are in that market.(a few, one, many etc)arrow_forward
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