ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 6.14P
A
To determine
The supply curve which indicates a constant supply industry and the one which indicates an increasing cost industry and to differentiate between a constant cost industry and an increasing cost industry.
B
To determine
The long run impact of an increase in market demand in a constant cost industry is to be differentiated from the impact in an increasing cost industry.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
question7)
the following is the total cost function and demand function of a certain firm
TC= 100 +20Q + 7QQd = 130-2Pa)- What is the type of this market? why?
b)Calculate the profit maximizing level of output and price for this firm.
c) Does the firm make profit or loss at this level of output? Why?
d)Should the firm produce this level of output or shut down? Why?
please all do subparts because I have very urgent solution
27- Under perfect competition, entry of new firms into the market in the long run tends to:
Select one: a. raise the level of profit of the existing firms.
b. reduce the market power of the existing firms.
c. raise the aggregate supply. d. raise the aggregate demand for goods.
e. reduce the degree of competitiveness in the market.
With neat explanation
3 examples of perfectly competitive markets and does these firms profit in long run or short run
Knowledge Booster
Similar questions
- 26.A firm operates in a perfectly competitive market and is producing at the profit-maximizing output. It is incurring economic losses. Based on this information, which of the following is true? A-Average total cost = price; marginal cost > marginal revenue. B-Average total cost = price; marginal cost = marginal revenue C-Average total cost > price; marginal cost = marginal revenue D-Average total cost > price; marginal cost > marginal revenue E-Average total cost < price; marginal cost > marginal revenue 27.In the short run, a price-taking firm decides to produce zero units of output. Which of the following must have been the case? A-The market price was less than the firm's average variable cost. B-The firm was earning normal profits in the short run but projected economic losses in the long run. C-The firm's average total cost was higher than its average revenue. D-The market price was between the firm's average variable cost and average total cost. E-The…arrow_forward27- Under perfect competition, entry of new firms into the market in the long run tends to: Select one: a. raise the level of profit of the existing firms. b. reduce the market power of the existing firms. c.raise the aggregate supply. d. raise the aggregate demand for goods. e. reduce the degree of competitiveness in the market.arrow_forward1. Draw the following for a firm in a competitive industry. Assume that the firm faces diminishing marginal product at some point. Remember to label all curves and axes. a. Fixed cost and average fixed cost. b. Marginal cost c. Average variable cost and average total cost. d. Identify the price ranges that will induce entry, exit and shutdown assuming all firms face identical cost curves. e. Assuming firms are producing at minimum efficient scale, draw the industry long run supply curve in parallel with or in reference to the firm level curves from above. 2. A major proposed industry in the future is the provision of global satellite wifi. However, the actual willingness to pay for such a service is unknown. Assume there's a 40% chance that there are 1 billion people willing to pay $100/year for a service that would cost $60/year to provide and a 60% chance that those people would be willing to pay $10/year for a service that would cost $60/year to provide. Assume that the enterprise…arrow_forward
- 28.The following information is available for a company that operates in a perfectly competitive market. Current Output 5000 units Current Market Price $5 Total Cost $25,000 Marginal Cost $4 Total Variable Cost $20,000 What is the best action for this firm? A-Increase output in the short run and stay in the market the long run. B-Increase output in the short run and decrease output in the long run C-Shut down in the short run and exit in the long run D-Shut down in the short run and produce in the long run E-Reduce output in the short run and increase output in the long run 29.Which of the following statements is true of a perfectly competitive market in the long run? A-No firms can enter or exit. B-All firms earn normal profits, and there is both productive and allocative efficiency. C-Individual firms produce where average variable cost equals marginal cost and marginal revenue. D-It is allocatively efficient but may or may not be productively…arrow_forwardTable 11.4 Number of Workers Total Product Product Price ($) 0 0 4 1 15 4 2 29 4 3 42 4 4 54 4 5 65 4 6 75 4 7 84 4 8 92 4 9 99 4 10 105 4 Refer to Table 11.4 for the data for a perfectly competitive firm. The first column shows the number of workers employed in production, the second column shows the total product of the firm, and the third column shows its product price. From the data in the table, it can be said that the marginal revenue product begins to decline with the second worker hired. Group of answer choices False Truearrow_forward8. (The Short-Run Firm Supply Curve) Each of the followingsituations could exist for a perfectly competitive firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to deter- mine what it should do in the short run.a. Total cost exceeds total revenue at all output levels. b. Variable cost exceeds total revenue at all output levels. c. Total revenue exceeds fixed cost at all output levels. d. Marginal revenue exceeds marginal cost at the currentoutput level. e. Price exceeds average total cost at all output levels. f. Average variable cost exceeds price at all output levels. g. Average total cost exceeds price at all output levels.arrow_forward
- (b) The profit maximization rule for a perfectly competitive firm states that the perfectly competitive firm will maximize its profits when it produces that quantity where marginal revenue equals marginal cost for the last unit produced and sold. In your own words explain why the firm is better off producing that quantity where MR = MC rather than that quantity where MR > MC or that quantity where MR < MC.arrow_forwardQuestion 3 The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. a. How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer? b. Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market. [Upload a picture] c. Assuming there is no change in either demand or the firms’ cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market.arrow_forwardQuestion 3 A profit maximizing firm in a competitive market is currently producing 150 units of output at a price of $20. Average total cost is $8 and fixed cost is $200. What is this firm’s profit? $1,800 $2,000 $800 $1,600arrow_forward
- 1. Give an example of how the profits change from the short run to the long run for a firm in a perfectly competitive market. 2. What are the similarities and differences between a short-run supply curve and a short-run market supply curve?arrow_forward7. Claude’s Copper Clappers sells clappers for $65 each in a perfectly competitive market. At its present rate of output, Claude’s marginal cost is $65, average variable cost is $45, and average total cost is $67. To maximize his profit or minimize his loss in the short run, Claude should increase output reduce output but not to zero maintain the present rate of output shut down raise price 8. A price taker in a perfectly competitive industry is currently selling 6000 units per month at the market price of $8 per unit. Monthly total variable costs are $50,000 and total fixed costs are $20,000. Marginal cost is $8 per unit and rising. Economic profits a. are equal to zero b. are greater than zero c. are less than zero d. cannot be determined 9. Choose two (2) of the incorrect answers to multiple choice Question #7 (Claude’s Copper Clappers problem) and explain why they are incorrect.arrow_forward20-The demand curve as perceived by a perfectly competitive firm is _______________. Group of answer choices flat downward sloping upward sloping U shapedarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
