Then, plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and averagevariable cost (AVC) curves for a typical firm in the industry.(?10090807060ATC50403020AVC10МС+++101520253035404550QUANTITY OF OUTPUT (Thousands of shirts)PRICE AND COST PER UNIT (Dollars) For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assumethat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the loss-minimizingquantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it willmake a profit, suffer a loss, or break even at each price.PriceOutput(Dollars per shirt)(Shirts)Produce or Shut Down?Profit or Loss?1032405060

In a perfectly competitive market there are large number of firms producing similar and identical…

onsider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average ariable cost (AVC) curves for a typical firm in the industry. 100 90

onsider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average ariable cost (AVC) curves for a typical firm in the industry. 100 90

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

Flora sells flowers in a perfectly competitive market. These cost functions represent her daily cost functions. TC = 100 + 0.50 + .2502 MC = 0.5 + 0.50 The current price is $9.50 Determine the profit/loss for Flora. Round to the penny. Suppose this is Flora's daily cost functions. This (profit/loss) value is expected to be constant for the next two weeks.What advice you would give her for these next two weeks related to running her business? Explain why.
Managers of perfectly competitive firms must be cautious when deciding to permanently expand (or contract) the scale of production. What factors should go into the decision to expand the scale of production if the market price of your product increases? (select all that apply) A. Whether your product has a complement in consumption B. If the scale expansion is appropriate and not in excess C. If other firms are likely to enter the market D. Whether the price change is temporary or permanent
Demand in an industry is expected to decrease permanently. Before the decrease in demand the industry was in a long-run equilibrium in which the number of firms was stable. What does the perfect competition model predict will happen to the price in the long-run after the decrease in demand? Group of answer choices The price will decrease The price will decrease if it is an increasing cost industry. The price will increase if it is an increasing cost industry. The price will increase
A foodstuff firm has variable cost function: VC = 2q(q+1). The foodstuff market is considered as perfect competition market with many firms that are doing business. a. Find the short run supply curve of the firm? b. The firm is break even at total revenue of $702. Calculate the firm's price and output at this break-even point? c. What is the firm's fixed cost? d. Calculate the price at which firm will shut-down its business?
Distinguish between short-run and long-run supply curves.
Long-run market supply curves are downward sloping if Group of answer choices All of these. input prices fall as the industry expands. firms are identical. the number of firms is restricted in the long run.
There are two reasons that some goods (toilet paper) are experiencing shortages (none available most of the time.) One reason is that stores don't want to look bad by raising prices dramatically in the face of the sudden, huge increase in demand. The other reason has to do with short run versus long run supply. Explain.
Explain in detail
Assume the natural gas industry is still living with the short-run supply disruption. Then, unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas. graphically depict any changes affecting the market for natural gas and any changes that impact the individual firm. Show the movements of the curves (if any) and the new Short Run Equilibrium (SRE). assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC curves. market price is always greater than the minimum of the AVC curve.
Illustrate to the right, a graph showing a company being profitable in a competitive market in the Long Run selling its product at Market Price (MP*) based on its Average Variable Cost (AVC) and Average Total Cost (ATC) and Marginal Cost (MC). Identify each key point on the graph. Observe the Short - Run Loss information illustrated in the graph to the right. With respect to Price (P*"), Average Variable Cost (AVC), Average Total Cost (ATC), Marginal Revenue (MR), and Marginal Cost (MC), what assumption would you make if the firm was selling its product at P What would happen if this were to continue in the long run? Is there a Shut Down point? ** ? Notice that MR = P
Costs and revenues C р 0 ATC MC D = AR MR Output Given the situation in the market, what will happen in this market in the long run? Most firms will shut down. Firms will enter the industry and the ATC curve will shift downwards due to economies of scale. Firms will leave the industry until supply of goods falls and zero economic profits are made. Firms will leave the industry and the industry will collapse.
If the cost of plaster and labor were $13 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?