Why is the demand curve facing an individual firm in a perfectly competitive market horizontal? Does this mean that consumers do not respond to price changes? Briefly explain. Suppose that firms operating in a perfectly competitive industry are experiencing positive profits (profits > 0). What do we expect to happen to the number of firms in this industry? What will happen to the profits of firms in this industry over the long-term? Explain
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- Why is the demand curve facing an individual firm in a
perfectly competitive market horizontal? Does this mean that consumers do not respond to price changes? Briefly explain. - Suppose that firms operating in a perfectly competitive industry are experiencing positive
profits (profits > 0). What do we expect to happen to the number of firms in this industry?
What will happen to the profits of firms in this industry over the long-term? Explain
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- (SEE PHOTOS) Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health. Health Canada's report will cause consumers to demand (LESS/MORE) chicken at every price. In the short run, firms will respond by producing less chicken and running at a loss exiting the industry entering the industry producing the same amount of chicken and running at a loss producing the same amount of chicken and earning positive profit producing more chicken and earning positive profit In the long run, some firms will respond by exiting the industry producing less chicken and running at a loss producing less chicken and earning positive profit entering the industry producing more chicken and running at a loss producing more chicken and earning positive profit until new technologies are discovered that…Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. PRICE AND COST PER UNIT 100 90 10 0 10 Price (Dollars per jacket) 15 20 25 55 70 85 20 10 100 0 00 For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. 20 10 D MC-D 0 · D 0 ATC O AVC On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that…Cióń 6 óf 20 The graph shows the demand curve (D), average total cost curve (ATC), average variable cost curve (AVC), and the 90 marginal cost curve (MC) for a perfectly (or purely) competitive firm. 80 D = MR Assuming that this firm maximizes profit, what is this firm's 70 profit? 60 ATC 50 AVC ğ 40 - profit: $ 30 MC 10 0 10 20 30 40 50 60 70 80 90 Quantity Price and cost ($) 20
- The following graph illustrates the demand and marginal revenue curve (D=MR) of a perfectly competitive firm. Suppose that when the firm produces 70 units, its average variable cost equals $30 per unit and its average total cost equals $55 per unit. Use the green rectangle (triangle symbols) to plot the total cost of producing 70 units. Next, use the grey rectangle (star symbols) to plot the total variable cost of producing 70 units. Then, use the tan rectangle (dash symbols) to plot the total revenue at 70 units. Finally, use the purple rectangle (diamond symbols) to plot the profit or loss at 70 units. PRICE AND COST (Dollars) 100 90 80 70 60 50 40 30 20 10 0 O 10 20 30 40 50 60 QUANTITY (Units) +ATC + AVC 70 D=MR 80 90 100 Total Cost Total Variable Cost Total Revenue Profit or Loss ?The following graph illustrates the demand and marginal revenue curve (D-MR) of a perfectly competitive firm. Suppose that when the firm produces 40 units, its average variable cost equals $65 per unit and its average total cost equals $80 per unit. Use the green rectangle (triangle symbols) to plot the total cost of producing 40 units. Next, use the grey rectangle (star symbols) to plot the total variable cost of producing 40 units. Then, use the tan rectangle (dash symbols) to plot the total revenue at 40 units. Finally, use the purple rectangle (diamond symbols) to plot the profit or loss at 40 units. PRICE AND COST (Dollars) 100 90 80 70 60 50 40 30 20 10 0 0 10 + 20 +ATC + AVC 30 40 50 60 QUANTITY (Units) 70 80 D=MR 90 H 100 Total Cost Total Variable Cost I Total Revenue Profit or Loss ?The table below provides revenue and cost information for a perfectly competitive firm producing computers. Over what output range will this firm incur losses? What is the slope of the total revenue curve? At about how many computers per day do economic profits seem to be at a maximum? Graph the economic model of this firm.
- he following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. What level of output should this firm produce in the short run? What price should this firm charge in the short run? What is the firm’s total cost at this level of output? What is the firm’s total variable cost at this level of output? What is the firm’s fixed cost at this level of output? What is the firm’s profit if it produces this level of output? What is the firm’s profit if it shuts down? In the long run, should this firm continue to operate or shut down? problem 1-6 are solved, this is subparts.Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 80 42.5, 60 ATC. 20 AVC 10 MO-O 10 15 20 25 30 35 40 50 QUANTITY (Thousands of shirts) For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indiſferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Shirts) (Dollars per shirt) Produce or Shut Down? Profit or Loss? 10 20 32 40 50 60 On the following graph, use the orange points (square symbol) to plot points along the…7. Short-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 80 ATC COSTS (Dollars per pound) N 72 64 56 40 32 24 16 8 0 0 4 ■ AVC MC 32 8 12 16 20 24 28 QUANTITY (Thousands of pounds) 36 40
- The graph shows the demand curve (D), average total cost curve (ATC), average variable cost curve (AVC), and the 90 - marginal cost curve (MC) for a perfectly (or purely) 80 - competitive firm. D= MR 70- Assuming that this firm maximizes profit, what is this firm's profit? 60 - ATC 50 AVC profit: $ 40 40- 30- MC 20 - 10- 40 10 20 30 50 60 70 80 90 Quantity Price and cost ($)6. Short-run supply and long-run equilibrium Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. (? 100 90 80 70 60 50 ATC 30 20 AVC 10 MC O 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of tons) COSTS (Dollars per ton) 8Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health. Health Canada's report will cause consumers to demand chicken at every price. In the short run, firms will respond by Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of Health Canada's announcement. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther ? Supply Demand PRICE (Dollars per kilogram) QUANTITY (Millions of kilograms)
