Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 8, Problem 6SCQ
A firm’s marginal cost curve above the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Explain 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.
For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why?
A stock market crash lowers people’s wealth.
Batelco increases the prices of mobile services.
Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?
Why will a firm never plan to supply an output at which it has increasing returns to scale?
Chapter 8 Solutions
Principles of Economics 2e
Ch. 8 - Firms ill a perfectly competitive market are said...Ch. 8 - Would independent trucking fit the characteristics...Ch. 8 - Look at Table 8.13. What would happen to the films...Ch. 8 - Suppose that the market price increases to 6, as...Ch. 8 - Explain in words why a profit-maximizing film will...Ch. 8 - A firms marginal cost curve above the average...Ch. 8 - If new technology in a perfectly competitive...Ch. 8 - A market in perfect competition is in long-run...Ch. 8 - Productive efficiency and allocative efficiency...Ch. 8 - Explain how the profit-maximizing rule of setting...
Ch. 8 - A single firm in a perfectly competitive market is...Ch. 8 - What are the four basic assumptions of perfect...Ch. 8 - What is a price taker firm?Ch. 8 - How does a perfectly competitive firm decide what...Ch. 8 - What prevents a perfectly competitive firm from...Ch. 8 - How does a perfectly competitive film calculate...Ch. 8 - Briefly explain the reason for the shape of a...Ch. 8 - What two rules does a perfectly competitive firm...Ch. 8 - How does the average cost curve help to show...Ch. 8 - What two lines on a cost curve diagram intersect...Ch. 8 - Should a firm shut down immediately if it is...Ch. 8 - How does the average variable cost curve help a...Ch. 8 - What two lines on a cost curve diagram intersect...Ch. 8 - Why does entry occur?Ch. 8 - Why does exit occur?Ch. 8 - Do entry and exit occur in the short run, the long...Ch. 8 - What price will a perfectly competitive firm end...Ch. 8 - Will a perfectly competitive market display...Ch. 8 - Will a perfectly competitive market display...Ch. 8 - Finding a life partner is a complicated process...Ch. 8 - Can you name five examples of perfectly...Ch. 8 - Your company operates in a perfectly competitive...Ch. 8 - Since a perfectly competitive firm can sell as...Ch. 8 - Many films in the United States file for...Ch. 8 - Why will profits for films in a perfectly...Ch. 8 - Why will losses for firms in a perfectly...Ch. 8 - Assuming that the market for cigarettes is in...Ch. 8 - In the argument for why perfect competition is...Ch. 8 - The AAA Aquarium Co. sells aquariums for 20 each....Ch. 8 - Perfectly competitive firm Doggies Paradise Inc....Ch. 8 - A computer company produces affordable,...
Additional Business Textbook Solutions
Find more solutions based on key concepts
What is the relationship between management by exception and variance analysis?
Cost Accounting (15th Edition)
Prepare a production cost report and journal entries (Learning Objectives 4 5) Vintage Accessories manufacture...
Managerial Accounting (5th Edition)
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (4th Edition)
What is a T-account? When would we use T-accounts?
Principles of Accounting Volume 1
What can a company do to reduce its workers' compensation insurance costs?
Construction Accounting And Financial Management (4th Edition)
Journal entries, T-accounts, and source documents. Visual Company produces gadgets for the coveted small applia...
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Knowledge Booster
Similar questions
- The graph shows the Cost curves for a profit maximizing firm in a competitive market. If the market price is $30 and the firm produces at the profit maximum quantity, what is the amount of the total fix costarrow_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_forwardA fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won't buy it because they don& like the taste. From an economic perspective, the company should keep the hamburger on the menu because they spent so much money and time developing and promoting the product. spend more money to develop a more efficient way to cook the hamburger so it cooks in a shorter time. pull the hamburger off the menu and treat the development and promotion expenditures as a sunk cost. keep trying to sell the hamburger so that people who developed and promote it have a job with the company.arrow_forward
- Marginal cost is given by the slope of total variable cost (TVC) curve, but not the slope of the total cost TC curve the slope of the total cost curve, but not by the slope of the TVC curve O the slope of the total fixed cost (TFC) curve either the slope of the TVC or the slope of the TC curvearrow_forwardIf the firms in a market have accounting profits that are larger than their implicit costs, then, in the long run, the market ______ curve will shift to the ______.arrow_forwardConsider the table below that describes the costs associated with producing a good (Q). Q Total Variable Cost Total Cost 0 0 30 1 30 60 2 50 80 3 65 95 4 77 107 5 87 117 6 100 130 7 120 150 8 160 190 9 220 250 10 300 330 What is the value of the marginal cost of producing the second unit? Enter your answer as a number below. Do not include a "$" sign.arrow_forward
- The marginal cost curve crosses the*average total cost curve at the maximum of the average total cost curve.average variable cost curve at the minimum of the average variable cost curve.total cost curve at the minimum of the total cost curve.average fixed cost curve at the minimum of the average fixed cost curve. The average variable cost curve and average total cost curve tend to converge as output rises because*the marginal cost curve intersects the average total cost curve at its minimum.the average fixed costs are constant as output rises.the difference between them (average fixed cost) declines.output is rising more rapidly than inputs are being increased Monopoly and pure competition*are alike in that entry is easy in both.are alike in that entry is blocked in both.differ in terms of the number of firms in the industry.differ in that monopoly is associated with a standardized product and perfect competition associated with differentiated products. With respect to entry and exit,…arrow_forwardWith identical firms, constant input prices, and all the other characteristics of a competitive market A)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium quantity but not price. B)a shift in demand has no effect on the long-run average cost and so there is no change in equilibrium price and quantity. C)a shift in demand will change the equilibrium price and quantity. D)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium price but not quantity.arrow_forwardIn a furniture market, if a furniture company is analyzing the short run total costs, one of the following business practices would be beneficial. Which one? divide the variable costs of production by the quantity of output divide the total costs of production by the quantity of output divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be. divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can bearrow_forward
- explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is rising ?arrow_forwardA fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won& buy it because they done like the taste. From an economic perspective, the company should.......... keep the hamburger on the menu because they have spent so much money and time developing and promoting the product. spend more money to develop a more efficient way to cook the hamburger so it cooks in a shorter time. pull the hamburger off the menu and treat the development and promotion expenditures as a sunk cost. keep trying to sell the hamburger so that people who developed and promote it have a job with the company.arrow_forwardWhat of the following is considered "sunk cost" in the short run? Variable cost. (VC, or TVC) Marginal cost. (MC) Fixed cost. (FC, or TFC) Average total cost. (ATC)arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you