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- A firm operating under perfectly competitive market experience normal profit whenConsider a perfectly competitive market that was in a long-run equilibrium when a permanent increase in demand occurs. Which of the following will occur as a result? i. The existing firms will start to earn an economic profit. ii. New firms will be motivated to enter the market. iii. Some firms that cannot meet the new demand will exit the market. A) i and ii only B) ii and ii only C) i and iii D) ii only E) i, ii and iiIn the short run, if a perfectly competitive firm chooses to produce, then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue. True False
- If a firm in a perfectly competitive market triples the quantity of output sold, then total profit will more than triple. less than triple. we need more information. exactly triple.For a perfectly competitive firm, P > MC at its current level of output. Then, this firm should decrease the quantity of output. decrease the market price. keep the current level of output. increase the quantity of output.Suppose the Christmas trees market is perfectly competitive. A business owner is currently suffering from a loss of $1,000, the cost of producing and selling an additional Christmas tree is $20, and the current market price is $25. The owner should advertise in the market. should shut down his business now. should sell more trees. is already minimizing his loss.
- Consider the figure below. If the industry is perfectly competitive and the market price is $15, what do we expect to happen in the long run? MC ATC y P $15 ******** D₁ Q Supply will shift from $1 to $2 Supply will shift from $2 to S1 O Demand will shift from D1 to D2 Demand will shift from D2 to D1 O MR-PTRUE OR FALSE If a perfectly competitive firm shuts down in the short run, its total cost equals zero.Assume perfect competition:Price: $58Cost: TC = 10Q + 0.03Q2Solve for the profit-maximizing Quantity produced by an individual firm in the short run. ROUND TO THE NEAREST WHOLE NUMBER.Enter as a value.
- Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands, which sell for $10 each. At this level of output, the marginal cost is $10 and the average variable cost is $12. Should the firm increase output, decrease output, or not produce? Explain why?A perfectly competitive firm will maximize its profit when marginal revenue is greater than marginal cost. True or False?draw a short run firm and industry competitive equilibriums for a perfectly competitive gator-farming industry before the number of alligator farms in florida doubled. for simplicity, assume that the gator farm is earning zero economic profit. now show the short run effect of an increase in demand for alligators.