Art’s Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC=$20, AVC=$18, and price per unit is $10. Given this situation, in the short run, Art will shut down immediately. Art will shut down, but only after the lease on the garage expires. Art will sustain losses in the short run but will continue to operate. Art will break even.
Q: . In a perfectly competitive industry, a. Firms earn a breakeven profit in the short-run, but…
A: In the short run, a firm that is operating at a loss (where the revenue is less that the total cost…
Q: The, competitive firm maximizes its profit by operating where:
A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…
Q: Firms in competitive market in the long run : Firms have positive economic profit Firm operate at…
A: The markets in each economy plays an important role in bringing the sellers, as well as the buyers…
Q: normal profit
A: There are different market structures like: ‘Perfect Competition’, ‘Monopoly’, ‘Monopolistic…
Q: Underer the assumption of perfect competition in short run firms only earn abnormal profit.…
A: The perfect competition is the market structure with large number of buyers and sellers, selling…
Q: Construct a graph with AVC, ATC, and MC curves. On this graph add a marginal revenue curve for a…
A: For perfectly competitive firms, demand curve is MR curve, and both are horizontal at price level.…
Q: In a perfectly competitive industry, long run equilibrium is characterized by OP MC OP> ATC
A: In the perfectly competitive market, a firms' Profit Maximizing constraint is different in short-run…
Q: Suppose the market equilibrium price of wheat is Rs.2 per bushel in a perfectly competitive…
A: Perfect competition is a market structure where there are many buyers and sellers selling…
Q: In a short-run perfectly competitive market of tomatoes, when P=$9, firm X produces 0 and firm Y…
A: Perfect competition is the market condition where there are large number if buyer and seller are…
Q: In the short run, a perfectly competitive firm Question 15 options: chooses its optimal plant…
A: In perfect competition there are many firms producing identical goods.
Q: Tomas is the general manager for a local automated car wash. The market he operates is perfectly…
A: Perfectly competitive market: It is a market structure where there exists a large number of buyers…
Q: Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech…
A: In the long run, competitive firms will operate at a level where marginal cost cuts the average…
Q: Draw ATC, AVC, and MC curves for a typical firm. Label the price at which the firm would shut down…
A: Average Total Cost (ATC) refers to the total cost of output per unit. It is estimated by dividing…
Q: Tulip growing is a perfectly competitive industry and all growers have the same costs. The market…
A: A perfect competition market, also called an atomistic market, is referred by various idealizing…
Q: If price is consistently below average variable cost, then in the short run a perfectly competitive…
A: Average variable cost is given by AVC =TVCq
Q: Identify a perfectly competitive firm that you have purchased a good or service from in the last…
A:
Q: The graph shows the cost curves of an individual firm in a perfectly (or purely) competitive…
A:
Q: Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $25 each. His…
A: Profit Maximization is a objective of firm with given resources . Firm focuses either to minimise…
Q: The shut-down point for a firm in a perfectly competitive industry is: P = MR P = ATC P = MC P =…
A: Average variable cost (AVC): - it is the average value of the cost incurred due to the employment of…
Q: Tomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which…
A: Firms in perfect competition are price takers who maximizes profit by producing at P=MC
Q: QUESTION 24 Jose's restaurant operates in a perfectly competitive market. At the point where…
A: Q24) "A perfectly competitive market maximize profits at a point where marginal revenue(or price)…
Q: Some firms in the market are making profit, others are having losses. Draw and explain graphs…
A:
Q: (Figure: Determining Profit) At price F, which of the following is NOT true for this firm in perfect…
A: Perfect competition:- According to theoretical framework, perfectly competitive exists when all…
Q: Suppose you start a business of manufacturing computer software. Assume that this computer software…
A: In the short-run, a business unit assesses its total revenue against total variable cost due to sunk…
Q: Price £/unit MC AC D Q2 Qs Q1 Quantity/ week Figure 8 Demand and cost curves for a price-taker firm…
A: A price-taker is a person or business that is forced to accept market prices because it lacks the…
Q: The following in formation is available for a company that operates in a perfectly competitive…
A: A perfectly competitive firm maximizes profit (or minimizes losses), when Price >= MC. The firm…
Q: A profit-maximizing firm is producing where MR = MC and has an average total cost of $4, but it gets…
A: a) Although the firm is operating at MR = MC, the price is less than ATC. Yet a firm produces in the…
Q: T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling…
A: Perfect competition refers to the market where firm has no opportunity to change the market price…
Q: Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run…
A: Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run…
Q: Identify a perfectly competitive firm
A: A perfectly Competetive firm is a price taker it means it has to accept the market prevailing price.…
Q: Crabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each…
A: Here, when analyzing the given information, it can be said that Crabby Bob resturant is facing…
Q: The table below shows Brody's total variable cost. He has a fixed cost of $240, and the price per…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: TRUE OR FALSE If a perfectly competitive firm shuts down in the short run, its total cost equals…
A: Perfectly competitive firm are those whose are price taker . They take the price which is formed by…
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: Consider a perfectly competitive industry composed of identical firms. All firms have the following…
A: Under perfect competition, there are a large number of firms who sell identical products. The firms…
Q: Reagan is a farmer and sells her wheat in a perfectly competitive market. Reagan produces 30,000…
A: A perfectly competitive firm in the short run will continue to produce even when the firm is making…
Q: Discuss with the help of graphical presentation and empirical example the situation that would cause…
A: Perfectly competitive market is the market where large numbers of sellers and buyers are exchanging…
Q: Camara's lawn-mowing service is a profit-maximizing competitive firm. Camara mows lawn for $27 each.…
A:
Q: Demand Demand ATC MR MR Quantity of Sparkle Toothpaste Quantity of Sparkie Toothpaste Price, Cost,…
A: The market specified here is that of monopolistic competition. In the long run, a firm in a…
Q: When a perfectly competitive firm decides to shut down, it is most likely that Group of answer…
A: In the Long Run, a firm in perfect competition always gets normal or zero profits. A perfectly…
Q: Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His…
A: A competitive firm is one of many firms producing identical goods.
Q: Suppose you start a business of manufacturing computer software. Assume that this computer software…
A: Given the fixed cost per month = 80,000 Total cost = 140000 Quantity of software = 1000 Average…
Q: Q6. Agriculture in India is mostly characterized by Perfectly Competitive Market! What are the…
A: A perfectly competitive market is where there are a large number of producers in a number of…
Question 8
Art’s Garage operates in a
|
Art will shut down immediately. |
||
|
Art will shut down, but only after the lease on the garage expires. |
||
|
Art will sustain losses in the short run but will continue to operate. |
||
|
Art will break even. |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changed his price to $8. Why? What about a price of $5?Crabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each month from May through September, suffers losses in October, November, and April but remains open, and remains closed from December through March. Given that the restaurant market in this town is perfectly competitive, how would you explain Crabby Bob’s decisions?Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $25 each. His total cost each day is $300, of which $60 is a fixed cost. He mows 15 lawns a day. In the short run, Bob should shut down or not shut down. In the long run, Bob should exit or not exit the industry.
- Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changes his price to $8. Why? What about the price of $5? What is his profit-maximizing price?QUESTION 10 Jack sells water bottles. Assume the market for water bottles is perfectly competitive. Jack sells his water bottles at the market price of $9.00. At the profit-maximising output level of 51 water bottles, Jack's average total cost is $4.40 per water bottle. The minimum average variable cost is $3.90 per water bottle. Answer the following questions: a. Jack's economic profit or loss is decimal places (ie: to the nearest cent). (use a negative value if a loss). Answer in dollars, rounded to two b. State whether the following statement is true or false: "At the profit-maximising quantity, Jack is making an economic profit of $4.60 per water bottle." Type T for true, or F for false c. State whether the following statement is true or false: "Jack should shut down if the market price is $3.85 per water bottle." Type T for true, or F for falseA 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
- Tomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which sell for $30 a bushel. At this level of output, the marginal cost is $30 a bushel, average variable cost is $30.50 a bushel, and average total cost is $34.50 a bushel. Should the firm increase output, decrease output, or not produce? Explain.Suppose you are thinking about starting a lawn service in your area. The lawn service market can be considered perfectly competitive. You own a $200 lawnmower. You have a fixed cost of $90 (maintenance costs on the mower, etc.). Your variable costs are as follows: # of Lawns Mowed Total Variable Costs Fixed Cost 1 $5 90 2 $15 90 3 $30 90 4 $50 90 5 $75 90 6 $105 90 7 $140 90 8 $180 90 9 $225 90 10 $275 90 a) Calculate Total Costs, Average Total Costs, Average Total Costs, Average Variable Costs, and Marginal Costs. b) Suppose that the going rate for lawns is $35 per lawn. How many lawns would you mow?Question 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units. Question 6.6. A firm should increase the quantity of output as long as its marginal revenue is greater than its marginal cost. marginal cost is greater than its marginal revenue. average revenue is greater than its average total cost. average revenue is greater than its average variable cost. Question 7.7. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is equal to the price. less than the price. greater than the price. equal to the average cost. Question 8.8. The classic…
- Question 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units.Lisa lawn company (LLC) is a lawn mowing business in a perfectly competitive market for lawn moving services. The following tables set out Lisa's costs Quantity(lawn per hour) Total Cost(dollars per lawn) 0 $30 1 $40 2 $55 3 $75 4 $100 5 $130 6 $165 A. If the market price is $30 per lawn, How many lawns per hour does Lisa's LLC now? B. If the market price is 30 per lawn, What is Lisa"s profit in the short run? C. if the market price falls to $20 per lawn, how many lawns per hour does Lisa's LLC now? D. if the market price falls to $20 per lawn, what is Lisa's profit in the short run? E. At What market price will Lisa shut down?Poinsettia growing is a perfectly competitive industry and all poinsettia growers have the same costs. The market price of poinsettias is $14 a pot and each grower maximizes profit by producing 1,100 pots a week. Average total cost of producing poinsettias is $15 a pot and average variable cost is $8 a pot. Minimum average variable cost is $4 a pot. What is the price at the grower's shutdown point? The price at the grower's shutdown point is S 11 a pot.