Consider a perfectly competitive firm in short run. If this firm faces a market equilibrium price lower than its minimum total average cost it will have economic losses and, therefore, must immediately close plant. Explain verbally and graphically your answer, demonstrating that you understood this situation
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- Jackson Hardware, a firm in the perfectly competitive custom hardware industry, asks you for your expert economic opinion. They tell you the following: - MC is $200/unit- Quantity produced 550 units - Total Revenue: $110,000 - Total FC are $80,000 - Total VC are $100,000 What is your advice based upon the info above?a) keep operating and increases productionb) shut down right nowc) keep operating but decreases productiond) Keep operating and do not change production at allThe graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.The Emerald Company, a firm in the perfectly competitive custom jewelry industry, asks you for your expert economic opinion. They tell you the following: Total revenue is $110,000, Total fixed costs are $80,000 Total variable costs are $100,000 Marginal cost is $220/unit Quantity produced is 550 unit What is your advice based upon the information above? Keep operating and do not change the current production level. Keep operating and increase production Keep operating but decrease production Shut-down immediately
- A firm in a competitive market has the following cost structure: Output Total Cost 0 $5 1 $10 2 $12 3 $15 4 $24 5 $40 This is a multiple-choice question, it asked 'If the market price is $4, what will this firm do?'. I answered 'It will shut down in the short run and exit in the long run.' but the correct answer is 'It will produce 3 units in the short run and exit in the long run.' I do not understand how they got that answer by looking at the cost structure. Thank you for your time!Farmer Brown grows blueberries. The average total cost, average variable cost, and marginal cost of growing blueberries for an individual farmer are illustrated in the graph to the right. Farmer Brown will incur losses if the market price falls below $ per crate. (Enter a numeric response using an integer.) Furthermore, farmer Brown should shut down in the short run if the market price falls below $ per crate. C Price and cost (dollars per crate) 40- 36- 32- 28- 24- 20- 16- 12- 8- 4 0 MC AT AVI 90 10 20 30 40 50 60 70 80 Quantity of blueberries (crates per week) 1Canadian red wheat is a normal good, in a perfectly competitive market that is in long-run equilibrium. There occurs a boom in the economy—incomes rise. What effect does this have on short-run equilibrium? Explain concisely the step-by-step process by which the industry returns to long-run equilibrium. Your answer should include the effects on the individual firm's output and profit, as well as any industry-wide adjustments that take place. Show graphically the relationship between the firm and the industry.
- If it is possible for a perfectly competitive firm to do better financially by producing rather than shutting down, then it should produce the amount of output at which:*MR < MCMR = MCMR > MCnone of the above Economies of scale means that*as output increases, the cost of producing that output decreases.as output increases, the cost per unit of output decreases.as output increases, the cost per unit of output increases. production is efficient because it is cheaper to produce as firm expands. In the short-run, the basic relationship between an individual firm’s supply curve under perfect competition and the market supply curve under perfect competition is*the individual firm’s supply curve is horizontal, but the market supply curve is upward slopingthe individual firm’s supply curve is vertical, but the market supply curve is upward slopingthe market supply curve is the summation of all the individual’s firms’ supply curvesthe market supply curve is equal to the average of all the…The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5A perfectly competitive firm faces the short-run cost schedule shown in Table (a)Calculate average total cost (ATC=TC/Q), marginal cost (MC=ATC/AQ) and marginal revenue (MR-ATR/AQ) for each level of output. The price per unit of output is £16 b) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? c) How much profit/loss is made at the optimum level of output? Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. If the firm is typical of other firms, what price will it charge in the long run? Explain.
- A perfectly competitive firm sells its product at a price of$0.10 per unit. Its total and marginal cost functions are: TC= 5 - 0.SQ + 0.001Q2 MC= -0.5 + 0.002Q, where TC is total cost($) and Q is output rate (units per time period). Solve for the profit maximizing quantity for this firm. My Question: in order to determine just profit maximizing quanitity, do we make MR=MC so the equation would be 0.10 = -0.5 + 0.002Q. Solve for Q then plug that number into the Q in the total cost equation to get the profit maximizing quantity?A perfectly competitive firm faces the short-run cost schedule shown in Table 1. A) Calculate average total cost (ATC=TC/Q), marginal cost (MC=∆TC/∆Q) and marginal revenue (MR=∆TR/∆Q) for each level of output. The price per unit of output is £16. B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? C) How much profit/loss is made at the optimum level of output?A 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