Q: A perfectly competitive firm has the following total cost function: Total output Total Cost 0…
A: Profit is maximized when Price = MC, where MC = Change in TC / Change in Q When Q = 4, MC = (69 -…
Q: The application of the marginal cost pricing principal in a decreasing cost industy would lead…
A: According to the given question The cost principle basically determines the practice of setting the…
Q: Which of the following statement(s) describe sunk cost? 1) All of the answers are correct 2) It…
A: To produce a good, two types of cost are incurred, variable cost and fixed or sunk cost.
Q: The Watts Brewing Company owns valuable water rights that allow it to produce better beer than…
A: Economic profit: The difference between the sales revenue and all input cost plus the opportunity…
Q: Financial value of the firm increases when the firm generates economic returns, in the context of…
A: The value that in turn determines the well-being and health of a firm during the long run depicts…
Q: zero economic profits in the short run and shut down. positive economic profits in the short run.…
A: profit, in business usage, the excess of total revenue over total cost during a specific period of…
Q: The MoonShine Restaurant operates in the competitive restaurant industry and has a total cost…
A: A perfectly competitive market is one that has a large number of firms selling homogenous goods.…
Q: Explain "Greater production is not tantamount to greater profit"
A: Economics is the branch of social science that deals with the production, distribution, and…
Q: Explain: “The short-run rule for operating or shutting down is P > AVC, operate; P < AVC shut…
A: Perfect competition is a market structure that has a large number of buyers and sellers who have…
Q: Match the following: a. Increasing cost industry b. Decreasing cost industry c. Constant cost…
A: Industry’s long-run supply curve has different shapes based on the extent to which the increase or…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Quantity produced Total cost($) Average total cost($) Marginal cost($) 0 20 0 0 10 27 2.7 0.7…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Given: To Find: The Market Price:
Q: Under a PCM, the long run equilibrium situation is that, Economic profit is equal to zero. Is this…
A: Under perfect competition market,Firms are price taker.Therefore whatever price is set by…
Q: Which formula represents the profits for a firm? (check all that apply) (AC=average cost,…
A: Total cost is the overall cost incurred in the course of production of the good.
Q: Use the variable cost information in the following table to caleulate average variable cost and…
A: 1. Total Cost = Fixed Cost + Variable Cost Average Total Cost = Total Cost Quantity Average…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Marginal cost is the additional cost incurred on the production of one extra unit of the output. In…
Q: In perfect competition, in the long run, P=minimum ATC. True False
A: The long-run equilibrium point for a wonderfully competitive market occurs where the demand curve…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Given: To Find: The marginal cost of producing the first 10 units of output
Q: A firm earns economic profit when total profit exceeds
A: To find : When firm book profit
Q: Define and explain the following terms associated with long run production Accounting profit…
A: The short-run is the time period where at least one factor of production is fixed and others are…
Q: n the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average…
A: Introduction: Short-run is a term that asserts that at least one input is fixed while others are…
Q: In the short run, if a marginal cost of a firm in a competitive industry is increasing while its…
A:
Q: Describe the sources of economic profit, both internal to the firm and external to the firm.
A: Economic profits are the difference between the total revenue and total cost, where total revenue…
Q: ABC company had decreasing returns to scale at all levels of output and it is divided up into 2…
A: The measure that depicts the change in output of industry or firm which results from a proportionate…
Q: Your company sells Beyonce concert DVDS. Total fixed costs for your operation are $10,000 a year.…
A: Shut down When a corporation chooses to shut down, it means that production will be put on hold for…
Q: The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost…
A: We can see that one of the axis we see the cost and profit is given, the verticle axis.Here, the…
Q: Perfect Competition I
A: There are 2 forms of market: Perfect and Imperfect market form. These includes markets like: Perfect…
Q: Use the following data to answer the question. The letters A, B, and C designate three successively…
A: Plant 'C' ATC is below other ATC for output level 80 units and above so plant C should be used for…
Q: Consider a firm that is currently producing a level of output that maximizes its profits. The firm…
A: Given: Revenue of the firm = $40 million per month. Worker Compensation = $30 million Renting of…
Q: Consider the following information about a business Rodriguez opened last year: price = $5; quantity…
A: Accounting profit is the net income created by a company. Accounting benefit is a company's net…
Q: Fill in the blank: In the long run, maximizing profits is different from minimizing costs as the…
A: In a market, there are some differences in dealing the market condition in the short-run and in the…
Q: Nabil cleaning service is a profit-maximizing, competitive firm. Nabil cleans washroom for $25 each.…
A:
Q: Question 3 Mehmood’s lawn-mowing service is a profit-maximizing, competitive firm. Mehmood mows…
A: It is given that the daily cost is $2800 and the fixed cost is $300. So variable cost = Total cost-…
Q: "There are some technologies for which it is impossible to maximize profit in the long run. "…
A: Maximization of profits occur at the point where the marginal revenue and marginal cost are equal.
Q: Explain manufacturing firms should use demand leading instead of demand trailing capacity strategy.
A: A lead limit technique (lead request procedure) is a proactive methodology that adds or takes away…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: The money spent to purchase the factor of production to produce the good is called cost of the…
Q: Which of the following definitions is correct? Economic profit accounting profit - implicit costs…
A: An economic profit or loss is the difference between the revenue received from the sale of an output…
Q: True or False: The industry is in a long-run equilibrium.
A: In the perfectly competitive market structure, every firm in the market produces identical goods and…
Q: Drag the marker labelled 'Point of minimum efficient scale' to the point of the LRAC curve that…
A: The size of a firm’s Minimum Efficient Scale (MES) compared to the size of the market has a…
Q: Which of the following is correct? economic profit + implicit costs = accounting profit O implicit…
A: Economic Profit is the difference of between the total revenue and total cost of all the inputs.…
Q: A perfectly competitive, profit maximizing firm earns zero economic profit in the long run. The…
A:
Q: Lisette owns a bakery. If she expands the size of her bakery but her average total cost of producing…
A: Here, Lisette being the owner of the bakery shop experiences constant returns to scale.
Q: Table: Cherry Farm Total Cost Quantity of cherries (in pounds) $2 13 16 21 28 38 Page 60 Use Table:…
A: Perfect competition refers to the type of market organization in which there are many buyers and…
Q: Choose the statement that is true. Fixed costs in the long run can become variable in the short run.…
A: Out of the given statements, only the fourth statement is true. The reason for this is explained…
Explain why a firm carries on production in short run even if it makes negative profit. Use well labeled diagrams to support your explanation.
Step by step
Solved in 2 steps with 1 images
- If you're a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?Small “Mom and Pop" firms sometimes exist even though they do not earn economic profits. How can you explain this? Think about what all is covered in economic profit?Marginal revenue must exceed marginal cost.Explain why?
- Consider the following information about a business Rodriguez opened last year: price = $5; quantity sold = 15,233; implicit cost = $18,000; explicit cost = $33,000. What was Rodriguez's accounting profit and economic profit? Show your work.Thinking on the Margin to Increase Profitability Have you ever walked into a restaurant for lunch and found it almost empty? Why, you might ask, does the restaurant even bother to stay open? It might seem that the revenue from so few customers could possible cover the cost of running the restaurant. Provide an opinion using the concepts of sunk costs, marginal cost and marginal revenue.Juan makes dining room chairs in a perfectly competitive industry. He is looking for economic advice and tells you the following data about his business. (Assume cost curves have their standard shapes.) Total revenue is $120,000, Total fixed costs are $100,000 Total variable costs are $110,000 Marginal cost is $200/unit Quantity produced is 600 units What will you suggest to Juan? A: Shut down immediately B: Do not shut down and increase production C: Do not shut down but decrease production D: Do not shut down and do not change the current production level.
- Family Mart like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this? It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss. What are the different type of costs incurred in the short run and in the long run?Suppose an increase in the cost of land increases the firm's fixed costs, as a result, average total cost increases from ATC2 to ATC1. What is profit maximizing quantity and price after the increase in average total costs? After the increase in average total costs does the firm make economic profit, economic loss or breaks even? How do you know? explain your answer.In the short run, the firm should
- Why do a firm's profit disappear in the long run?Can excess profit be earned in this industry in the long run?Price and Cost 961 The graph below contains the relevant cost curves for a perfectly (or purely) competitive firm. The graph below is not graded. You can move point A to help you answer the questions. 1000 900 800 700 600 500 400 300 200 100 0 0 MC Quantity ATC AVC AFC 100 200 300 400 500 600 700 800 900 1000 860 The price of the good must be above what point for the firm to earn positive economic profits? Number $ 600 What is the shutdown price for this firm? Number $400