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- If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
- Using graph, explain when the firm in a competitive market is in equilibrium?4. Profit maximization in the cost-curve diagram A Consider a perfectly competitive market for shirts. The following graph shows the daily cost curves of a firm operating in this market. PRICE Dollars per sht 20 HE 16 12 34 LE AD 72 OUTPUT (Theunts of shirts! Chow Ad In the short run, at a market price of $185 per shirt, this firm will choose to produce shirts per day. On the previous graph, use the blue rectangle (dirde symbols) to shade the area representing the firm's economic profit or loss if the market price is $18 and the firm chooses to produce the quantity you already selected. Tool tip: Mouse over the shaded region on the graph to see its area. The area of this rectangle indicates that the firm would have per day. For each price in the following table, calculate the firm's optimal quantity of units produced and determine the economic profit or loss if it produces at that quantity. Use the data from the previous graph to identify its total variable cost. Assume that if the…4. Profit maximization in the cost-curve diagram Suppose that the market for wind chimes is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 40 36 Profit or Loss 32 28 24 АТC 16 12 AVC 8 MC 4 + 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of wind chimes per day) 20 PRICE (Dollars per wind chime)
- 15. The table below shows cost data for producing different amounts of refrigerators. Use the given information to answer the questions below. Quantity Total Cost Variable Cost Marginal Cost Average Variable Cost Average Total Cost in $ in $ in $ in $ in $ 241 0 271 30 361 120 491 250 681 440 901 660 0 10 What is the profit (loss) at that level of production? 20 30 40 50 How many refrigerators would a competitive firm produce if the market price was $19? 3 9 13 19 22 3.00 6.00 8.33 11.00 13.20 27.10 18.05 16.37 17.02 18.02Attempts: Average: 12 5. Profit maximization and shutting down in the short run Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. V ATC AVC PRICE (Dolars per watch) 100 5 MO 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY(Thousands of watches) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price Quantity (Dollars per watch) (Watches) 25.00 40.00 65.00 Total Revenue Fixed Cost Variable Cost (Dollars) (Dollars) (Dollars) 520,000 $20,000 520,000 (Dollars) If the firm shuts down,…A market is in long-run equilibrium and firms inthis market have identical cost structures. Supposedemand in this market decreases. Describe whathappens to the market quantity as the market leavesand then returns to long-run equilibrium
- Suppose the market for fresh pork is a competitive market. Initially, it is operatingat its long-run competitive equilibrium at a market price of $50.Owing to the spread of COVID-19, many people turn to buying frozen meat oncea week rather than fresh pork every day. As a result, the market price of fresh porkreduces to $30.a. With the aid of a pair of market-and-firm diagrams, illustrate how thiswould affect the equilibrium price and quantity in the fresh pork market andthe output of a typical butcher of fresh pork in the short-run.b. Suppose, for the situation in (a), the average cost of a typical butcher offresh pork is $40, which includes $15 on buying meat from suppliers, $12on paying rent, $8 on paying hourly wages on staff, and $5 on other costs.Explain whether a typical butcher should shut down in the short run.QUESTION 3 Figure: Cost Curves for Corn Producers Price, cost of bushel $30 26 22 18 14 10 مان 6 2 0 1 MC 2 3 4 5 6 7 Quantity of corn (bushels) ATC AVC The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. At the profit ]maximizing quantity of output in the figure, the farmer's total revenue is , total cost is , and profit is4. Profit maximization in the cost-curve diagram All- Consider a perfectly competitive market for shirts. The following graph shows the daily cost curves of a firm operating in this market. PRICE Dlars per sht 20 16 12 12 Price (P) 56 34 AD 12 LE OUTPUT(Theunts of art! In the short run, at a market price of 31 per shirt, this firm will choose to produce 12 18 ME ATC AVC Quantity (Q) Pr On the previous graph, use the blue rectangle (dinde symbols) to shade the area representing the firm's economic profit or loss if the market price is $18 and the firm chooses to produce the quantity you already selected. Tool tip: Mouse over the shaded region on the graph to see its area. The area of this rectangle indicates that the firm would have Chow Al For each price in the following table, calculate the firm's optimal quantity of units produced and determine the economic profit or loss if it produces at that quantity. Use the data from the previous graph to identify its total variable cost. Assume…