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- Show graphically and explain what happens in competitive firm and in market in short and long run if: (a) Consumers' income increases.(b) Consumers' income decreases.Explain market conditions in the long run(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…
- Show the competitive firm in long run equilibrium and describe productive and allocative efficiency. Demonstrate what happens to equilibrium price and quantity with an increase in market demand. Can the firm make economic profit in the short run? What about the long run?Land of Many Lakes (LML) sells butter to a supermarket in New York. Since the market for butter is usually considered to be perfectly competitive, LML company Select one: a.can choose quantity of butter that it produces but not the price at which it sells its butter. b.cannot choose either the price at which it sells it butter or the quantity of butter that it produces. c.can choose both the price at which it sells its butter and the quantity of butter that it produces. O d.can choose the price at which it sells its butter but not the quantity of butter that it produces.Cost MC Select one: ATC AVC ABC D Quantity C in the figure above represents the output level where the firm Quantity a. maximizes profits in the short-run. b. minimizes total costs in the short-run. C. maximizes profits in the long-run. d. minimizes marginal costs in the long-run. e. None of the above.
- According to the graph below, if the price of the good is $17, then the result for the perfectly competitive firm will be: Graph: Short-run profit and loss Price MC ATC AVC 1S 13 Quantity Select one: a. making a long-run loss and so it will shut down. b. making a short-run loss but it will continue to produce. c. making a long-run profit. d. making a normal profit.what are the possibilities of perfect competition in short run?a. Draw a perfectly competitive firm earning a loss but still producing. Label the price, quantity and loss. Next to this, draw the market. b. Draw how this market will adjust in the long-run and the effect this will have on the firm.
- What is long run and short run production? What is immediate market periodThe graph below provides a perfectly competitive graph for a firm in the short run, complete 1a – 1d using the graph. a. Assume the price of the firm’s product in the graph is $15 per unit. The firm will produce how many units per week, Why? b. At what price would the firm earn a zero economic profit in the short-run? Why? c. If the price the firm faces for it’s product is $6 per unit. What should the firm do? d. Assume the price of the firm’s product in Exhibit 1 is $10 per unit. The maximum profit the firm earns is? Why?Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's economic and accounting profits in the short run ? A. Economic profits are minus $10 and accounting profits are $20 B.Economic profits are $20 and accounting profits are minus $10 C. None Which one?
