Suppose that a firm in a competitive market faces the following revenues and costs. The firm should not produce an output level beyond what quantity? Quantity Total Revenue Total Cost $0 $2 $6 $5 $12 $9 $18 $13 4 $24 $18 $30 $25 $36 $32 6

Table 1 shows the total cost schedule for a competitive firm. Price per unit of output is £7. Quantity 0 1 2 3 4 5 6 7 8 Total Cost 15 25 30 34 38 45 55 70 100 Table 1 D) Assume that the firm's minimum average variable cost is £6.5. Should the firm continue operating in the market in the short run? In the long run? Explain. E) If the firm is typical of other firms in the market, what price will it charge in the long run? Explain.

The cost curves below are for a firm competing in a perfectly competitive industry. If the market price is $7.50, a profit-maximizing firm would: Price and cost 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 2 MC y A A 1 B a 10 11 12 ATC AVC 13 Quantity Produce between 10 and 11, for a positive economic profit Produce about 9, for an economic profit of over $9 Produce between 10 and 11, for an economic profit of about $0 Produce about 9, for an economic profit of less than $9 Produce about 10, for an economic profit of about $20

s 1, 12 & 13 Assignment Saved Help Save & Exit Assume a purely competitive increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will Multiple Choice leave the industry, price will fall, and quantity produced will rise. enter the industry and price and quantity will both rise. leave the industry and price and quantity will both rise. leave the industry, price will fall, and quantity produced will fall.

$150 $145 $140 MC $135 $130 $125 $120 $115 ATC $110 $105 $100 $95 $90 $85 $80 AVC $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 0 1 2 3 5 6 Quantity Produced 7 8 9 10 11 The graph above shows the cost functions for a perfectly competitive profit maximizing firm. If the market price of the product is $70 per unit, the firm will produce units, will cover make an economic profit of dollars. dollars of its fixed cost, and will

1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: 2) A firm that is motivated by self interest should 3) If price is above the equilibrium level, competition among sellers to reduce the resulting 4) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to 5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement 6) In a market economy the distribution of output will be determined primarily by 7) In a competitive market economy firms will select the least-cost production technique because 8) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut…

Problem #1: Assume that the following marginal costs exist in catfish production: 17 Quantity Produced (units per day) Marginal Cost (per unit) 10 11 12 13 14 15 16 $4 6 8 10 12 14 16 18 (a) Graph the MC curve. (b) Use the data on market demand below and graph the demand and MR curves on the same graph. Quantity demanded (units per day) 10 Price (per unit) 11 12 13 14 15 16 17 $25 24 23 22 21 20 19 18 (c) At what rate of output is MR = MC?

Why does a firm in perfect competition produce the quantity at which marginal cost equals price? In a perfectly competitive market, the price of a handsaw is $25. When a firm maximizes its profit, it produces 6 handsaws a day. Draw the marginal revenue curve. Label it. Draw the marginal cost curve that illustrates the profit-maximizing output. Label it. Draw a point at the profit-maximizing output and price. A firm produces the quantity at which marginal cost equals price because when marginal cost is greater than price, the firm O A. can increase economic profit by producing 1 less handsaw O B. is maximizing economic profit OC. is at its shutdown point O D. can increase economic profit by producing 1 more handsaw 50- 45- 40- 35 30- 25- 20- 15- 10- 5 0- 0 Price (dollars per handsaw) 10 Quantity (handsaws per day) >>> Draw only the objects specified in the question.

A firm producing ice pop in a perfectly competitive market with an equilibrium price of $1.50 has the following Quantity of ice Total Cost pops 0 $3 10 $8.00 20 20 $10.50 30 $15.50 59 40 $30.50 50 $50.50 60 60 $75.50 70 70 $105.50 What is this firm's marginal revenue from the 50th unit? MR(50) = $ What is this firm's marginal revenue from the 60th unit? MR(60) = $

Suppose a competitive firm has the following cost: output(units): 10     11      12  13    14    15    16     17      18      19 Total cost:     $50 $52 $56 $62 $70 $80 $92 $106 $122 $140  3. If the market price dropped to $8, how much should this profit maximizing firm produce?