g. What is the firm's profit if it shuts down? h. In the long run, should this firm continue to operate or shut down? Copyright © The McGraw.Hill Companies, Inc. Permission required for reproduction or display $48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8. 6. 4 2. MC ATC Df MR AVC AFC Quantity 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.57 7.5 8 8.5 9 9.5 10

Suppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $30.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) At this level of output, profit will be $. (Enter your response rounded to the nearest dollar.) Peach growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal place.) Price (dollars per box) 40- 36- 32- 28- 24 20 16- 12- 8 4- 10 MC 20 30 40 50 60 70 80 Output (boxes of peaches per day) ▬▬ ATC 90 100 Q

What is the most important decision a perfectly competitive firm must make in order to maximize profit? what quantity to produce what price to charge what quality to produce what quantity of labor is needed

Q3

A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues:             TC = $830,000             VC = $525,000             TR = $428,000   Given that the firm produces the level of output at which MR=MC, calculate the amount of profit (loss) this firm earns. is it Profit=TR-TC?

In Problem 5, the market demand decreases and the demand schedule becomes: If firms have the same costs set out in Problem 5, what is the market price and the firm’s economic profit or loss in the short run? Problem 5 The market for paper is perfectly competitive and 1,000 firms produce paper. The table sets out the market demand schedule for paper. The table in the next column sets out the costs of each producer of paper. Calculate the market price, the market output, the quantity produced by each firm, and the firm’s economic profit or loss.  

The following graph plots the market demand curve for ruthenium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. PRICE (Dollars per pound) 100 90 80 60 50 20 10 0 Demand equilibrium. ■ 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) ☐ O True Δ O False 0 Supply (10 firms) ♦ If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be would earn zero profit . Therefore, in the long run, firms would Supply (20 firms) Supply (30 firms) Because you know that competitive firms…

Suppose Amari operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $20 per phone case. The following graph shows Amari's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for phone cases for quantities zero through seven (including zero and seven) that Amari produces. TOTAL COST AND REVENUE (Dollars) 200 150 125 100 75 50 25 0 0 O Search Total Cost 20 Total Revenue Profit C Ccc U

For each price in the following table, use the graph to determine the number of lamps 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 lamps 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 (Dollars per lamp) 15 20 PRICE (Dollars per lamp 80 RS232 70 26 25 55 70 85 10 588 288 8 COSTS (Dolars) 20 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 corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) (? 10 0 10 D Quantity (Lamps) 0 0 Either 0 or 45,000 10 60,000 65,000 70,000 MC-D 20 D 20 30 40 50 60 75 NO QUANTITY (Thousands of…

7. Short-run supply and long-run equilibrium Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 90 80 70 60 50 40 30 20 10 0 0 MC 5 ATC AVC + + 10 15 20 25 30 35 QUANTITY (Thousands of pounds) 40 45 H 50 image 1