Microeconomics For Today (MindTap Course List)
9th Edition
ISBN: 9781305507111
Author: Irvin B. Tucker
Publisher: Cengage Learning
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Chapter 8, Problem 7SQ
To determine
The supply curve of a
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Justin’s Jeans sells in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $33 per unit, and the total fixed cost is $30.(a) Identify the profit-maximizing quantity. Explain using marginal analysis. (b) Calculate the economic profit at the profit-maximizing quantity you identified in part (a). Show your work.(c) Calculate the average fixed cost of producing 6 units. Show your work.(d) Based on your answer to part (b), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.(e) Based on your answer to part (b), will the market price increase, decrease, or stay the same in the long run? Explain.(f) The income elasticity of demand for Good M is 1.4, and the cross-price elasticity of demand for jeans with respect to the price of Good M is −0.75. Based on your answer to part (e), what will happen to the demand for jeans? Explain.(g) Now assume that the market in which…
The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses.
Which of the following statements is true about the price of fertilizer? Check all that apply.
The price of fertilizer must be less than marginal cost.
The price of fertilizer must be equal to average variable cost.
The price of fertilizer must be less than average total cost.
The following graphs show the cost curves faced
a typical firm, the demand for fertilizer, and possible price and supply curves.
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(?
Firm
Market
Demand
ATC
TAVO
MC
Quantity
Quantity
Price and Costs
P.
Price
The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses.
Which of the following statements is true about the price of fertilizer? Check all that apply.
The price of fertilizer must be less than average total cost.
The price of fertilizer must be equal to average variable cost.
The price of fertilizer must be less than marginal cost.
Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply.
Average total cost will decrease.
The quantity supplied by each firm will decrease.
The total quantity supplied to the market will decrease.
Marginal cost will decrease.
The price of fertilizer will increase.
Chapter 8 Solutions
Microeconomics For Today (MindTap Course List)
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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- Suppose Andy sells basketballs in the perfectly competitive basketball market. His output per day and costs are as follows: Output per Day (Q) 0 1 2 3 5 6 7 8 9 Total Cost (TC) $10.00 $20.50 $24.50 $28.50 $34.00 $43.00 $55.50 $72.00 $93.00 $119.00 1) Make a table with Quantity (Q), Total Cost (TC), Fixed Cost (FC). Variable Cost (VC), Average Total Cost (ATC), Average Variable Cost (AVC), Marginal Cost (MC), and Marginal Revenue (MR) on it (using the Long-Run Equilibrium Price). 2) To maximize profits, how many basketballs will Andy produce? Identity the profit maximizing Quantity (Q*). Price (P*), and Profit (¹).arrow_forwardA perfectly competitive market arises when A) there are few buyers and many sellers. B) each of the many firms produces a slightly different product. C) there are many buyers and few sellers. D) there are many buyers and sellers.arrow_forwardA breakfast place, a perfectly competitive eatery, sells its special for $5. Cost of waiters, cooks, and power average out to $3.95 per meal; cost of lease, insurance and other expenses average out to $1.25 per meal. What should this owner do. A)close her doors immediately b)continue producing in the short and long run c)continue producing in the short run, but plan to go out of business in the long run if price does not increase in the future d)raise her prices above the perfectly competitive level e)lower her outputarrow_forward
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