Suppose that the demand curve faced by a firm is downward sloping. Which of the following statements is true? Question 5Answer a. The firm faces constantly changing production technology b. The firm operates in a perfectly competitive market c. The firm’s marginal revenue is equal to the market price d. The firm is not a price-taker
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- Suppose that the demand curve faced by a firm is downward sloping. Which of the following statements is true? Question 5Answer a. The firm faces constantly changing production technology b. The firm operates in a perfectly competitive market c. The firm’s marginal revenue is equal to the market price d. The firm is not a price-taker16 $20 $18 MC АТС i of $16 P = MR $14 $12 AVC $10 $8 $6 $4 $2 $0 200 400 600 800 1,000 1,200 Output (Q) The diagram above shows a Perfectly Competitive firm in the short-run. At the profit maximizing Output (Q) level, the firm will earn a Total Profit of: Select one: а. $1,000 b. $1,600 с. $3,200 d. $2,000ATC Price MC AVC 8. 7- 9. 10 11 12 13 Quantity The graph shows the cost curves of a firm in a competitive industry. The market price is $5. In the short run, the firm should Choose one: * A produce the output at which MR = MC and earn a profit. B. produce the output at which MR = MC and suffer a loss. O C. shut down the operation. 9 D. There is not enough information to answer the question. 1st attempt
- 1)A perfectly competitive firm produces 1000 units of burger in the long run. Themarginal revenue is RM6. Calculate this firm's marginal cost, average fixed cost, longrun average cost, total cost, total revenue, and total profit.Calculate the amount of profit or loss made by this firm at the equilibrium output. State the type of profit.7. A perfectly competitive firm can sell its product for a price of 10. The firm's (short run) total cost function is: C(q) = 5 +3q+q². On a well-labeled graph, draw a figure illustrating the firm's profit at different levels of output. Show the profit-maximizing level of output on the graph. a. b. c. Write an expression for the firm's profit maximization problem. Solve the firm's profit maximization problem to determine the optimal level of output. Be sure to check whether or not the firm should shut down. d. Suppose instead that the price of the output falls to 5. Should the firm shut down? Explain. e. Suppose that instead of the cost function given above, the cost function is C(q) = 5 + 3q. The price of the good is 10. What happens if you try to maximize profit in this situation? Explain.
- A firm in a competitive market receives $500 in total revenue and has marginal revenue of $10. What is the average revenue, and how many units were sold? Microeconomics - MankiwThe diagram at the right shows the various short-run cost curves for a perfectly competitive firm. a. Based on the diagram, and the assumption that the firm is maximizing its profit, fill in the following table. The last three columns require only a "yes" or "no". Market Firm's Is Price > Is Price > Are Price ($) Output ATC? AVC? Profits Positive? $4 $5 $7 $8 $10 Price ($) $1Q $8 $7 $5 $4 135 MC 155:170190 210 Output ATC AVCShow all the work clear handwriting Suppose the market price of a good is $20 and TC=0.5Q2. A. What Q should a profit maximizing perfectly competitive firm choose? B. What are profits? C. Draw a graph that shows the short run choice of Q, revenue and profits.
- Imagine you own a company STR LLC. You produce homogenous and easily available goods. Explain the type of market you are operating in. Elaborate your pricing strategy where you can earn normal profits. You have to show production costs and revenue in a table at what production levels you manage to earn profits or otherwise make losses. References: • Makowski, L., & Ostroy, J. M. (2001). Perfect Competition and the Creativity of the Market. Journal of economic literature, 39(2), 479-535. Kaldor, N. (1935). Market imperfection and excess capacity. Economica, 2(5), 33-50.24. The figure to the right illustrates the cost curves of a perfectly competitive firm. If the market price is P1 Price and cost (dollars per pound) ATC AVC 0 D-MR 0₁ 02 03 A. The firm will experience a loss since price is less than ATC. B. The firm will break even by producing a quantity of Q2. C. The firm may make a profit if it can increase the demand for its product. D. The firm will experience a loss and raise its price to P2. The firm will then break even. Quantity (thousands of pounds) 1What is the short run supply curve of a perfect competitive firm. Expalin using illustrations
