Consider the perfectly competitive market depicted in the graphs. Assuming the market is in equilibrium, what should this firm do? lay off workers temporarily in the short run keep producing in the short run
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- A firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?The market for apple pies in the city of Ectenia is competitive and has the followingdemand schedule:Price Quantity Demanded$ 1 1,200 pies2 1,1003 1,0004 9005 8006 7007 6008 5009 40010 30011 20012 10013 0 ch producer in the market has fixed costs of $9 and the following marginal cost:Quantity Marginal Cost1 pie $ 22 43 64 85 106 12a. Compute each producer’s total cost and average total cost for 1 to 6 pies.b. The price of a pie is now $11. How many pies are sold? How many pies does eachproducer make? How many producers are there? How much profit does eachproducer earn?c. Is the situation described in part (b) a long-run equilibrium? Why or why not?d. Suppose that in the long run there is free entry and exit. How much profit does eachproducer earn in the long-run equilibrium? What is the market price? How many piesdoes each producer make? How many pies are sold in the market? How many pieproducers are operating?
- Price nd cost d Refer to the diagram to the right which shows the cost and demand curves for a proft - maximizing tem in a perfectly competitive market. if the market price is $30 and the firm is producing output, what ia the amount of the fem's proft or lose? MC ATC A. koss of $1,080 AVC t 40.50 A36.00 OB prott of S1,440 OC. loss of $2.520 30.00 MR OD. profit of $1,300 22.00 20.00 130 180 240 QuartyPrice (dollars per pound) S Market price 2 0 10 20 30 Supply of apples 40 Demand for apples 50 Quantity (thousands of pounds) Price and cost (dollars per pound) Market price 2 10 يلا 20 30 40 ATC -D-MR 50 Quantity thousands of pounds) Given the two diagrams, the left showing the market supply and demand, the right showing a typical individual firm in this competitive market, what would you expect will happen over time? Existing firms will increase output with positive profits. Existing firms will exit the market and average profits by market firms will remain positive. New firms will enter the market and average profits by market firms will remain positive. Existing firms will exit the market and average profits by market firms will be zero in the long run. New firms will enter the market and average profits by market firms will be zero in the long run.Suppose that the market for frying pans 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. 100 80 Profit or Loss 70 ATC 60 50 40 20 AVC 20 MC 10 10 12 QUANT TY Thousands of pans per dey 140 45 32 PRICE (Dollars per pan) 品 导
- The graph contains individual supply curves for the only two firms in a hypothetical market for stuffed animals. Place the market supply curve at the correct location on the graph. Then, consider what would happen to the market if a third suppi enters the market, holding all else constant. Price per Stuffed Animal (5) 10 9 110 7 6 DA A m 2 Market for Stuffed Animals Firm Firm 2 Market 0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 A third firm would mean O market supply increases. O higher prices of stuffed animals. market supply decreases. Firm 1 and Firm 2 would lower output to accommodate the new supplier in order to keep market supply constant.Price and cost $40.50 36.00 30.00 22.00 20.00 O Lover b. profit of $1,440 c. loss of $2,520 d. profit of $1,300 MC ATC 130 180 240 adest erias in 20 AVC MR Quantity 34. Please refer to the figure above: If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss? a. loss of $1,080p/costs 12 4 5 3 сл MC ATC MR In a perfectly competitive market, what output will this firm produce? 1 2 3
- 18 IV 16 14 II 12 A P1=MR1 10 8. B Po=MRo 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do? O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits. O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which will Cost 41Macmillan Learning Ⓒ The graph contains individual supply curves for the only two firms in a hypothetical market for stuffed animals. Place the market supply curve at the correct location on the graph. Then, consider what would happen to the market if a third supplier enters the market, holding all else constant. Price per Stuffed Animal ($) 10 Incorrect 8 7 6 5 4 3 2 11 0 0 Market for Stuffed Animals Firm 1 Market Firm 2 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Quantity of Stuffed Animals A third firm would mean market supply increases.The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC АТС of Ear Buds ($) ($) 9.00 - 10 2.00 5.50 15 2.44 4.48 20 3.56 4.25 25 4.50 4.30 30 5.02 4.42 35 5.96 4.64 40 8.56 5.13 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$ d. Now assume the market price is $5.50 per pair, and Buddies produces the…