Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 8, Problem 12SQ
To determine
The profit of the firm producing below
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In the long run, firms in a competitive marketA.earn positive accounting profit, but zero economic profit.B.earn zero accounting profit and zero economic profit.C.shut down because their accounting profit goes to zero.D.earn negative accounting profit, but positive economic profit.
Perfectly competitive firm that makes economic loses in the short run must cease its operations. do you agree? Expalin using illustrations
Galaxy is a firm in perfectly competitive market. Galaxy currently produces and sells 400 units of toys. Its total revenue is $4,000; the marginal cost of producing the last toy is $12; and the average total cost of producing the the last toy is $8. Is the Galaxy maximizing its profit, or should it increase or decrease output in order to increase its profit? Explain to get full credit.
Chapter 8 Solutions
Micro Economics For Today
Ch. 8.5 - Prob. 1YTECh. 8.5 - Prob. 2YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQP
Ch. 8 - Prob. 9SQPCh. 8 - Prob. 10SQPCh. 8 - Prob. 11SQPCh. 8 - Prob. 12SQPCh. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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- A perfectly competitive firm faces the short-run cost schedule shown in Table 1. A) Calculate average total cost (ATC=TC/Q), marginal cost (MC=∆TC/∆Q) and marginal revenue (MR=∆TR/∆Q) for each level of output. The price per unit of output is £16. B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? C) How much profit/loss is made at the optimum level of output?arrow_forward1.9) Given a perfectly competitive firm, which of the following statements are true? Select one or more: a.In the long run, the firm can make profits greater than normal profit. b.Marginal revenue will be less than price. c.In the short run, the firm can make profits greater than normal profit. d.In the short run, average cost cannot be greater than price.arrow_forward39) If a perfectly competitive firm operates in the short run but exits the industry in the long run, then the firm's short run condition isA) TR > TVC and TR < TC. B) TR > TC.C) TR < TVC. D) TR < TFC.arrow_forward
- Q2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves. Figure 2: Market for Burger (a) What is Perfect Competition? (b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes. (d) With no change in demand or technology, how will the price change in the long run? (e) Distinguish between technological efficiency and economic efficiency.arrow_forwardA perfectly competitive firm faces the short-run cost schedule shown in Table Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. If the firm is typical of other firms, what price will it charge in the long run? Explain.arrow_forwardThe cost data in the following table are for Marshall’s Meats, a perfectly competitive firm. Round your answers to 2 decimal places. Output Average Variable Cost Average Total Cost Marginal Cost Total Cost 0 / / / $110 1 $ $ $ 140 2 160 3 190 4 224 5 280 6 342 7 458 a. Complete above the table. b. What is the shutdown price? Shutdown price: $ c. If the market price of the product is $56, what quantity will Marshall’s Meats produce? What will be its profit or loss?arrow_forward
- For a burger seller Marginal, average variable and average total cost curves are attached below: 1. what is profit maximizing level of output and profit of this firm if the price of burger is $3.50? 2. Below what price will this firm shut down in the short run? 3. If the price was $4.50 ehat would be the firm's profit?arrow_forwardShow all the work clear handwriting Suppose the market price of a good is $20 and TC=0.5Q2. A. What Q should a profit maximizing perfectly competitive firm choose? B. What are profits? C. Draw a graph that shows the short run choice of Q, revenue and profits.arrow_forwardWhat are some characteristics of perfect competition? Is the Banana market a perfect competition? When you are buying bananas, what is your decision making process? Do you have any favorite brand of banana? How can companies in the market compete? Please name some other examples of perfect competition?arrow_forward
- Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, then the firm will set its price at ____ and produce ____ units. $4; 40 $6; 40 $6; 55 $6; 30arrow_forwardA perfectly competitive firm faces the short-run cost schedule shown in Table 1. A) Assume market price declines to £9 per unit. If the firm’s average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. B) If the firm is typical of other firms, what price will it charge in the long run? Explain.arrow_forwardIn perfect competition, Q=50, AVC=50 and AFC=40. Calculate the profit at P=100. (10p) (Q: quantity, AVC: average variable cost, AFC: average fixed cost, P:price)arrow_forward
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