Company ABC produces goods X which are sold in a perfectly competitive market. The selling price of the goods X on the market is Rp10. The cost curve faced by company ABC for producing goods X and The demand curve for goods X for company ABC is as shown in the following figure. P \MC AC Rp. 10 D=P = MR Rp. 7 AVC 100 unit Determine the balance of goods for ABC company! In this condition of balance, is the company making a profit or suffering a loss? and how much profit / loss is incurred in ABC company in such equilibrium conditions?

Imagine a perfectly competitive wood industry composed of 240 identical firms. The production output, q for each firm is determined by the function 9 = K1/2* L¹1/2, where K represents capital and L stands for labor. The $25 and PL prices for capital and labor are PK = $4, respectively. With labor fixed at 25 units, and the market demand described by Qd = 260 2P, what would be the economic profit or loss at equilibrium for these firms? -98 -99 99 98 = =

6. Short-run perfectly competitive equilibrium Consider a perfectly competitive market for wheat in New York City. There are 90 firms in the industry, each of which has the cost curves shown on the following graph: COST (Cents per bushel) 100 90 80 70 60 50 40 30 20 10 0 ATC 0 5 AVC 10 15 20 25 30 35 40 QUANTITY OF OUTPUT (Thousands of bushels) MC The following graph shows the market demand for wheat. 45 50 ?

After serving as President of the United States for eight years, Dena has retired from politics and has decided to become a wheat farmer. The market for wheat is perfectly competitive and the current market price for wheat is $10 per bushel. Dena is currently producing 8 bushels (Dena can only produce this good in whole units). Her total cost at 8 units of output is $88 and her variable cost at 8 units of output is $64. Dena knows that if she produces a 9th unit her total cost will become $97, and if she produces a 10th unit her total cost will become $110. Dena’s goal is to maximize her profits. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning.  Dena is currently losing money in the short-run and she would be better off if she shutdown and produced zero. Dena is not currently profit maximizing at 8 units of output and she could increase her profits if she expanded output by one unit. Dena would increase her…