PRINCIPLES OF MICROECONOMICS LOOSE LEAF
12th Edition
ISBN: 9780134081083
Author: CASE
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 1.5P
To determine
To graph the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
draw marginal cost, marginal revenue, and average total cost curves for a typical perfectly competitive firm in long-run equilibrium and indicate the profit maximizing level of output and total profit for that firm.
Consider an industry where there is perfect competition (with the conventional horizontal long-run market supply curve). Initially, all of the firms are making zero economic profit, then, the price of an important input falls so that firms all make positive economic profit in the short run, but in the long run economic profit returns to zero. Draw this using a two-panel diagram. Draw the representative firm panel on the left-hand-side and the market panel on the right-hand-side. Your diagram must be carefully drawn and properly labelled. Explain why, referring to your diagrams, in the long run profit returns to zero. ( maximum word limit: 150 words)
Define perfect competition. Does a firm under perfect competition always make supernormal profit? Explain your answer with appropriate diagrams.
Chapter 9 Solutions
PRINCIPLES OF MICROECONOMICS LOOSE LEAF
Knowledge Booster
Similar questions
- The graph attached illustrates the Demand, Marginal Revenue, Marginal Costs, Average Total Costs and Average variable Cost curves for a firm in a perfectly competitive market. What is the breakeven price? Explain your answer. What is the shot down price? Explain your answer.arrow_forwardDraw and describe a diagram representing the cost curves – MC, AC, and AVC – for a profit-maximizing firm under perfect competition. Show U-shaped AC and AVC curves. Label the breakeven and shut down prices. Also, show a price between the breakeven and shut down prices and explain how the firm decides on its profit-maximizing/loss-minimizing output level at that price and show how the amount of profit or loss can be shown in the diagram. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardThe graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market. Instructions: Use the nearest whole numbers on the graph when calculating numerical responses below. " A graph summarizes the demand and costs for a firm that operates in a perfectly competitive market.""The horizontal axis labeled quantity ranges from 0 to 11 in increments of 1. The vertical axis labeled dollar ranges from 0 to 48 in increments of 4. A horizontal line labeled D-superscript f = M R enters the quadrant through the point (0, 28). An upward-facing curve labeled M C begins at the point (0.5, 20) goes down to the right with decreasing steepness to a low point at (3.5, 8) then goes up to the right with increasing steepness to end at the point (8, 40). A second upward-facing curve labeled A V C begins at the point (0.5, 22) goes down to the right with decreasing steepness to a low point at (5, 12) then goes up to the right with increasing steepness to end at the…arrow_forward
- A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $150. Marginal cost curve intersects the average total cost curve at $200. Marginal cost curve intersects the marginal revenue curve at $170. At Q = 100, ATC = $210 and AVC = $155 Is this firm making a profit or a loss at Q = 100? What would you suggest this firm should do in the short run? Explain.arrow_forwardFirm Aleph operates in a perfectly competitive market in a constant-cost industry and is earning negative economic profit. Why might Firm Aleph continue to operate despite earning negative economic profit? Explain. Draw correctly labeled side-by-side graphs for Firm Aleph and the market it operates in. Label the axes and all of the following: Market price (PE) and market quantity (QE) The firm's quantity of output (Qe) The firm's average total cost (ATC) Completely shade the area of the firm's total revenue. Identify whether the following increase, decrease, or remain constant as the market moves to long-run equilibrium: Market equilibrium quantity Market equilibrium price Assume the product that Firm Aleph produces has a positive externality. Draw the marginal social benefit (MSB) on the market graph from part (b). Will the unregulated market produce more or less than the socially optimal quantity? Shade the area of deadweight loss caused by the externality, when the market is…arrow_forwardFirm Aleph operates in a perfectly competitive market in a constant-cost industry and is earning negative economic profit. Why might Firm Aleph continue to operate despite earning negative economic profit? Explain. Draw correctly labeled side-by-side graphs for Firm Aleph and the market it operates in. Label the axes and all of the following: Market price (PE) and market quantity (QE) The firm's quantity of output (Qe) The firm's average total cost (ATC) Completely shade the area of the firm's total revenue. Identify whether the following increase, decrease, or remain constant as the market moves to long-run equilibrium: Market equilibrium quantity Market equilibrium price Assume the product that Firm Aleph produces has a positive externality. Draw the marginal social benefit (MSB) on the market graph from part (b). Will the unregulated market produce more or less than the socially optimal quantity? Shade the area of deadweight loss caused by the externality, when the market is…arrow_forward
- Create a graph that shows the cost curves and profit maximizing output level for a perfectly competitive firm. Label your graph clearly and title your graph with the name of a firm that would exist in a perfectly competitive industry. Consider the characteristics of perfectly competitive markets. Include: Average total cost, marginal cost, and marginal revenue. Indicate the profit-maximizing quantity and price for this perfectly competitive firm Image attached with details. Thank you!arrow_forwardConsider a market structure of perfect competition where firms have a U-shaped average cost curve. Describe the transition from short-run equilibrium to long-run equilibrium, noting the assumptions that are made in this modelarrow_forwardConsider a perfectly competitive market for wheat in Dallas. There are 110 firms in the industry, each of which has the cost curves shown on the following graph: The following graph shows the market demand for wheat. Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.) At the current short-run market price,…arrow_forward
- please answer question 11 and 12 and 13 11- the market price for the product is $29. If company A wants to maximize its profits and sells in a purely competitive market, how many should they produce? 12- using the price given in Q 11, will company A make an economic profit or economic loss? Show your calculation 13- given the economic profit/loss calculate in Q12, will firms enter or leave this industry or is this industry at long run equilibrium? Why?arrow_forwardA profit-maximizing firm in a competitive industry has the cost structure shown in the table below. Quantity Average Total Cost Average Fixed Cost Marginal Cost 1_ 25.00 20.00 4.20 2 14.40 10.00 3.60 3 10.87 6.67 4.20 4 9.40 5.00 6.00 5 9.00 4.00 9.00 6 9.33 3.33 13.20 7 10.26 2.86 18.60 8 11.70 2.50 25.20 9 13.62 2.22 33.00 10 16.00 2.00 42.00 Calculate this firm's shut-down price and explain your answer. What is this firm's supply curve? In answering this question, indicate the minimum price necessary for the firm to produce a positive quantity and the quantity it would produce at that minimum price? (Hint: Draw on your answer to part a.) If marginal revenue is $9, how much output will the firm produce, and how much profit will it make? Show your calculations.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc