Consider Exhibit 7-11, which shows the graph of a perfectly competitive firm in the short run.a) If the firm's demand curve is MR3, does the firm earn an economic profit or loss? b) Which demand curve(s) indicate(s) the firm incurs a loss?c) which demand curve(s) indicate(s) the firm would shut down?d) Identify the firm's short-run supply curve. 1001003.4.1001008. Consider Exhibit 7-11, which shows the grapperfectly competitive firm in the short run.a. If the firm's demand curve is MR,, does theearn an economic profit or loss?b. Which demand curve(s) indicate(s) the firmincurs a loss?Which demand curve(s) indicate(s) the firmwould shut down?с.d. Identify the firm's short-run supply curve.EXHIBIT 7-11 A Perfectly Competitive FirmMCATCAVCPrice perMR3unit(dollars)MR2MRQuantity of output(units per hour)©Cengage Learning®

Perfect competition is a business system where a homogeneous commodity is sold by several companies.…

which shows the graph of a perfectly competitive firm in the short run. a) If the firm's demand curve is MR3, does the firm earn an economic profit or loss? b) Which demand curve(s) indicate(s) the firm incurs a loss? c) which demand curve(s) indicate(s) the firm would shut down? d) Identify the firm's short-run supply curve.

which shows the graph of a perfectly competitive firm in the short run. a) If the firm's demand curve is MR3, does the firm earn an economic profit or loss? b) Which demand curve(s) indicate(s) the firm incurs a loss? c) which demand curve(s) indicate(s) the firm would shut down? d) Identify the firm's short-run supply curve.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 33CTQ: Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the...

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Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
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