4. The number of firms that can survive in a very competitive industry in the long run depends on a. Total quantity demanded at the price that prevails in the long run b. The minimum efficient scale of production for any one firm c. Both a and b d. Neither a nor b
Q: 1. In a perfectly competitive market, the marginal : of the firms is horizontal. revenue curve
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
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A: Total revenue = Price * quantity 2500 = 12 * qty Qty = 208
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Q: 3. The figure below shows short run cost and revenue curves firm. Price and cost per unit MC £5 ATC…
A: 3) The curve shows the demand and MR curves along with the cost curves.
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Q: -1 Under conditions of perfect competition, Price = AR = MR. Explain why these values are equal.
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- a perfectly competitive market over the long run, a. an increase in market demand or a decrease in firms' costs will lead to a decrease in the number of firms operating within the market. b. an improvement in production technology will increase profits at fust, but those profits will be competed away over time as more firms enter the industry and reduce market price. c. market price will equal maximum possible average total cost in long-run equilibrium. d. an increase in demand will cause the final market equilibrium to be at the original price but at a lower output level.1. 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…1.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. A. The price of fertilizer must be less than marginal cost. B. The price of fertilizer must be equal to average variable cost. C. The price of fertilizer must be less than average total cost. 2. If firms in the market are producing output but are currently making economic losses,_________ illustrates the present situation for the typical firm in the market, and_________ indicates the corresponding supply curve. 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. A.The quantity supplied by each firm will decrease. B.The total quantity supplied to the market will decrease. C.The…
- 3. Apples are produced in a perfectly competitive industry. Assume that there are 100 identical firms in this industry. Below are graphs for the market supply and demand as well as the cost curves of these firms. 6. ATC AVC 1 0 100 200 300 400 500 600 Q(kg) 3 4. 6 q(kg) (a) Draw the market supply curve for apples. (b) What are the market price and quantity for apples? How much does each firm produce? (c) Calculate the amount of profit or loss for a firm. (d) Do you expect there to be entry of new firms into this industry, the exit of firm from this industry or neither of the above? Briefly explain. (e) What is the long run equilibrium price of apples and exactly how many (identical) firms will be producing the good? P(TL/unit) 2. P(TL/unit) 2.Pretzel stands in New York City are a perfectly competitive industry in long-runequilibrium. One day, the city starts imposing a $100 per month tax on each stand.How does this policy affect the number of pretzels consumed in the short run and thelong run?a. down in the short run, no change in the long runb. up in the short run, no change in the long runc. no change in the short run, down in the long rund. no change in the short run, up in the long runWhen are you are you expecting companies to produce in the short run?A. costs equal equal revenueB. price equals marginal revenueC. Average costs equal marginal costsD.marginal revenue equals marginal cost
- When can firms decide to shutdown the business? a. When average fixed cost is greater than total revenue b. When average variable cost is greater than the marginal revenue c. When the price does not cover average variable cost d. When marginal revenue is decreasing Firms experience a break even point when a. Total revenue is greater than total cost b. Marginal cost os equal to marginal revenue c. Average fixed cost is equal to average variable cost d. Marginal revenue is zeroi. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will A. keep producing in the short run but exit the market in the long run. B. shut down in the short run but return to production in the long run C. shut down in the short run and exit the market in the long run. D. keep producing both in the short run and in the long run.
- Q5 Why will a perfectly competitive firm not sell its product below the prevailing market price? a. It can sell all it wishes at the market price. b. This would lead to a price war among sellers. c. The sellers in the market have agreed to not sell below a specified price. d. Its costs would increase dramatically. e. It faces inelastic demand.Price 8 7 6 5 3 I I I II 1 O Choose one: 10 11 12 13 MC 11/05/18 ATC AVC Quantity The graph shows the cost curves of a firm in a competitive industry. The market price is $4. In the short run, the firm should A produce the output at which MRMC and earn a profit. B. produce the output at which MR MC and suffer a loss. C. shut down the operation D. There is not enough information to answer the question.12. If the price is less than average total cost for a perfectly competitive firm in the short run, then the firm a. is earning a positive economic profit. b. should continue to operate, as long as price is equal to or greater than average variable cst. c. should certainly shut down. d. should continue to operate, as long as price is equal to or greater than average fixed cost. e. is making zero economic profit.