A perfectly competitive firm currently sells each unit of output at $3 and faces an average total cost of $5 at optimal output. What should the firm do? 1) Exit the industry as it is making a loss. 2) Continue to produce at the current output. 3) Continue to produce but reduce output. 4) Not possible to tell.
Q: If you know that the market price for a perfectly competitive firm is 10 Dirhams and the average…
A: In the perfectly competitive market structure there exists a large number of buyers and sellers of…
Q: Perfectly competitive firms maximize profits by choosing the profit-maximizing output level. They…
A: Perfect competition is the market structure where there are large no of buyers and sellers selling…
Q: Consider a perfectly-competitive industry where each firm has the following long run cost function…
A: In perfectly competitive market, price is constant so it is equal to marginal revenue. Profit is…
Q: Firms in the market for soccer balls are selling in a purely competitive market. A firm in the…
A: Average Variable Cost is defined as the variable cost per unit of a good. Average Total Cost is…
Q: n the long run, perfectly competitive firms are at equilibrium when: (LMC = Long-Run Marginal Cost;…
A: Under a perfectly competitive market structure, the firms are price takers who accept the market…
Q: If it is possible for a perfectly competitive firm to do better financially by producing rather than…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A perfectly competitive firm does not increase its quantity of output without limit, even though it…
A: Answer: Introduction: A perfectly competitive firm is a price taker. In perfect competition, firms…
Q: must each perfectly competitive firm be in equilibrium if the industry is in the long-run…
A: Perfect competition refers to the situation where there are large number of prouder and consumers…
Q: True or false ? why ? 1. In the long run, a perfectly competitive firm with diseconomies of scale…
A: Note: You have uploaded multiple questions at a time. Hence we shall answer only the first one for…
Q: What is the short-run Shutdown condition for a perfectly competitive firm? P>AVCminimum…
A: In a market, a shutdown point refers to the point at which a firm is unable to recover its operating…
Q: Problem IV: A perfectly competitive firm has a total cost function given by T C(Q) = 2Q3 – 20Q2 +…
A: since you have asked a multipart question and according to our policy we will only solve the first 3…
Q: A perfectly competitive firm will tend to expand its output as long as:A) marginal revenue is…
A: A perfectly competitive firm will tend to expand its output as long as Price exceeds marginal cost.…
Q: A perfectly competitive firm that is maximizing profits will experience which of the following price…
A: Perfect competitive market has large number of buyers and sellers, has free entry and exit of firms…
Q: If a perfectly competitive firm is producing an output level where average variable cost is equal to…
A: "A profit maximizing firm in a perfectly competitive market will maximize profits at a point where…
Q: Output (units per day) The above figure illustrates a perfectly competitive firm. If the market…
A: Perfect competition is a market form where there are large number of buyers and sellers selling…
Q: Company ABC produces goods X which are sold in a perfectly competitive market. The selling price of…
A: A perfectly competitive firm is in equilibrium at the point where : The marginal revenue (MR)…
Q: You are a consultant on profit maximization. What do you recommend in each of the cases below for a…
A: Perfect competition is a market condition when many sellers are selling homogenous products. The…
Q: The key characteristic which prevents firms in a perfectly competitive industry from earning…
A: In perfect competition there are large number of buyers and sellers selling homogeneous goods which…
Q: A perfectly competitive firm sells its output for $0.99 per unit. At 10,000 units of output per…
A: Under a perfectly competitive market, there are a large number of buyers and sellers. Each seller…
Q: In a perfectly competitive market, in the short-run, a firm shuts down if Their average cost is less…
A: A perfect competition market refers to the ideal market. This type of structure includes a variety…
Q: Perfectly competitive firms earn zero economic profit in the long run. True False
A: In perfectly competitive market, price is constant so it is equal to marginal revenue. Profit is…
Q: Assuming a horizontal long-run market supply curve, which of the following statements is (are) TRUE…
A: In the long run, a perfectly competitive firm produces at a level of output where P = MC = AC. At…
Q: The long -run supply curve for gem diamonds is positively sloped because increases in diamond output…
A: In the perfect competition,products are identical. If people no longer want to buy diamond rings…
Q: A perfectly competitive industry has a large number of potential entrants. Each firm has an…
A: A perfectly competitive market could be a hypothetical market that's consisted of the many firms and…
Q: Which of the following is NOT necessarily true about the long-run equilibrium of a perfectly…
A: A perfectly competitive firm is a price taker and choses the level of output where marginal cost…
Q: The second-order condition for a firm maximizing its profits operating in a perfectly competitive…
A: Profit is maximized at the point where the marginal cost is equal to marginal revenue.
Q: In the short-run model of perfect competition, there is always a range of prices above the shutdown…
A: When talking about a perfectly competitive firm it can be seen that the firm will stay in the market…
Q: In the long-run, perfectly competitive firms produce at the point where P = ATC MR = MC…
A: in perfect competitive market, there are many number of sellers and buyers which turns the market…
Q: Which of the following is true of perfectly competitive firm that keeps producing in the short run?…
A: A perfectly competitive market is characterized by a large number of buyers and sellers. The price…
Q: If a perfectly competitive firm’s supply curve is given by Q = -18 + P, which of the following is…
A: The supply curve, Q = -18 + P
Q: A perfectly competitive firm is producing at the point where its marginal cost equals the price of…
A: We are going to use profit maximisation structure of a perfectly competitive firm
Q: In a perfect competitive industry, the market price is R20. An individual firm produces output at…
A: Answer: C (they should decrease production) Explanation: The price is less than the marginal cost…
Q: Create a graph that shows the cost curves and profit maximizing output level for a perfectly…
A: A perfectly competitive firm is characterized by five factors: infinite number of buyers and…
Q: In the long-run, perfectly competitive firms produce at the point where P = ATC MR = MC P = MC All…
A: Perfectly competitive market refers to a market structure where there are many firms and buyers.…
Q: Which of the following is always true when a perfectly competitive firm is producing at a profit…
A: In perfect competition, price is always constant. Marginal cost equals the increase in total cost…
Q: A perfectly competitive firm is in the following situation: output = 6000 units; market price = $2;…
A:
Q: Consider a perfectly competitive market that was in a long-run equilibrium when a permanent increase…
A: A perfectly competitive market is one where there are several buyers and seller such that, all…
Q: Consider two perfectly competitive industries, A and B, both operating in a state of long-run…
A: There are 2 perfectly competitive industrie's A and B.There is constant returns to scale for both…
Q: Perfectly competitive firms will react to profits in the long run by _______ production.
A: The market is a location where the transaction of services and commodities takes place.
Q: When new firms enter a perfectly competitive market in which firms are making an economic profit,…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A perfectly competitive firm should shut down in the short-run if price falls below the minimum of…
A: A perfectly competitive market is the one where there are large number of buyers and sellers selling…
Q: A firm sells its product in a perfectly competitive market where other firms charge a price of $90…
A: We are given , TC = 50 + 10q + 2q2 Since the firm sells it's product in a perfectly…
Q: Consider a perfectly competitive barley producing sector in Western Canada with increasing costs and…
A: The markets in an economy are considered to be of utmost importance for the economic, and financial…
Q: draw marginal cost, marginal revenue, and average total cost curves for a typical perfectly…
A: In a perfectly competitive industry, there is a large number of buyers and sellers. Firms sell…
Q: Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost…
A: Given for the ice cream market:- ATC(Q) = (50/Q) + (Q/2) (Average Total Cost)…
Q: Suppose that the perfectly competitive shrimp industry is in long-run equilibrium at a price of $3…
A: When the government report states that eating shrimp is bad for health, people will reduce their…
A
1) Exit the industry as it is making a loss.
2) Continue to produce at the current output.
3) Continue to produce but reduce output.
4) Not possible to tell.
Step by step
Solved in 2 steps
- Refer to the graph of a perfectly competitive market. How many units will the firm choose to sell, and at what price? In the short term, what will be the total revenue, total cost, and total profit of the firm? If at some point in the future the market price fell below $6 (for example where Point A is) what would the firm do?In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm's long-run decision? Group of answer choices 1. how much to spend on advertising and sales promotion 2. what price to charge buyers for the product 3. whether or not to enter or exit an industry 4. the profit-maximizing level of outputThe graph below shows cost curves for a typical firm operating in a perfectly competitive market. Curve 1 represents Marginal Cost (MC), Curve 2 represents Average Variable Costs (AVC) and Curve 3 represents Average Total Costs (ATC). Suppose that the equilibrium price is $12. What will happen in this market in the long run? a. No new entry/no exit. b.Existing firms will exit. c.New firms will enter.
- Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn‑based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? A. The price per bushel of corn will continue to increase, yielding higher profits. Thus, more firms will enter the market indefinitely. B. Profits will become negative due to overfarming, which will result in the corn farming industry going under. C. Profits will be equal to zero. D. None of the above. Suppose the firms in the market for bacon, also a perfectly (or purely) competitive industry, experienced losses last quarter due to people becoming increasingly concerned about how high-fat diets negatively impact health. What do you expect to happen in the long run for the bacon industry? A. Seeing this as an opportunity to monopolize a fledging industry, firms will enter the industry, shifting…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.A perfectly competitive firm will maximize its profit when marginal revenue is greater than marginal cost. True or False?
- The graph below gives marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm. Note that marginal revenue (MR) is not shown. Suppose the firm operates in a perfectly competitive market and acts to maximize its profit. which of the following is/are true? I. At a price of 1.5, the firm will shut down in the short-run. II. At a price of 0.5, the firm will shut down in the short-run. III. At a price of 2.5, the firm will make a positive economic profit. 7 MC АТС AVC 3 2 1 1 Quantity 2. 4. PriceFirms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? Why? What would you expect the market to do in the long run? Why?A firm in a perfectly competitive industry knows the following about its costs and revenue. The firm would like to maximize profit and has hired a consultant for advice. Price Q of Output Total Revenue Total Cost Total Fixed Cost 10 500 TR? 9,400 TFC ? Total Variable Cost Average Total Cost Average Variable Cost MC 6,500 is at minimum level AVC? MC? Total Revenue Number Total Fixed Cost Number Average Variable Cost Number Marginal Cost Number What is the value of the profit or loss (-) at the current output ( include the - sign if it's a loss) Number Consultant's Advice: As a consultant, what advice would you give to this firm:(Choose ONE answer from the following) Number 1. Firm should do nothing; it is already profit maximizing/loss minimizing 2. Firm should reduce quantity of output 3. Firm should increase quantity of output 4. Firm should shutdown operations 5. The given number set is inconsistent
- The diagram above represents a perfectly competitive firm that faces a demand curve d. Answer the following questions. Show all calculations. From the diagram, how many units should this firm produce to maximize profit? From the diagram data, calculate the firm’s total profit. Assuming no changes in the costs of production, in the long run how much will this firm produce and at what price? From the diagram, at what price will this firm break even? From the diagram, at what price should this firm shut down?TRUE OR FALSE? A decreasing cost industry has a long run supply curve that is upward sloping.The wheat industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure attached; the long-run cost curves of a wheat farmer are shown in the right-hand panel. Currently, the market price for wheat is $2 per pound, and at that price, consumers are purchasing 800,000 pounds of wheat per day. Using the graphs attached, answer the following: a. How many pounds of wheat will each farmer produce if they want to maximize profits? b. How many farmers are currently serving the industry (fractional numbers are fine)? c. In the long run, what will the equilibrium price of wheat be? Briefly explain your answer.