The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 10.5 Price B P₁ D A E MC 0 Q1 Q₂ Quantity MC: Marginal cost curve MR: Marginal revenue curve. ATC: Average-total-cost curve AVC: Average-variable-cost curve ATC AVC MR Assume the price facing the firm in Figure 10.5 is P1. Which of the following statements is true? The firm should shut down because price per unit received is less than average total cost. Total revenue for the firm is area OBDQ1- Total cost for the firm is area OP EQ- The firm's total revenue is more than sufficient to cover its variable costs, so it should remain in operation. The firm should produce Q2-

The 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 AVC

Graph below represents the cost structure of an individual firm in a perfectly competitive market. ATC MC 50 40 e AVC 30 20 10 8 10 11 12 Quantity (per day) a. Write down the break-even and the shut-down points (both corresponding quantities and prices) for this firm on the table below. quantity (q) Price (P) Break-even Point Shut-down Point b. If the price in this market is $50, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output. Show your calculations If the price decreases to $25. C. i. Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Explain your answer ii. Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium?…

Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit.                 Quantity (units) 0   1     2     3     4     5      6    7     8      9      10Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250Answer the following questions:a. What is the profit-maximizing level of output? Calculate Apex’s profit.b. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?c. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?d. Comment on your answers to parts (2) and (3

MC ATC 24 P = MR 20 18 4 100 350 500 700 q Bales of hay from the graph of a perfectly competitive firm above, answer the following questions:# 1. What is the profit maximization level of of output? ( 2. What is the value of ATC at the best level of output? 3. what is the amount of profit the firm makes at that level of output? show your calculations. 4. At what price firm will breakeven В I

The cost data in the following table are for Marshall’s Meats, a perfectly competitive firm.   Round your answers to 2 decimal places.  Output Average Variable Cost AverageTotal Cost MarginalCost Total Cost 0 /   /   /   $ 100   1 $    $    $    130   2          150   3          180   4          220   5          270   6          330   7          440     a. Complete above the table. b. What is the break-even price?    Break-even price: $        c. What is the shutdown price?    Shutdown price: $ d. If the market price of the product is $50, what quantity will Marshall’s Meats produce? What will be its profit or loss?        Quantity:  ;   (Click to select)   Loss   Profit  : $ e. If the market price of the product is $110, what quantity will Marshall’s Meats produce? What will be its profit or loss?     Quantity:  ;   (Click to select)   profit   loss  : $

Consider a firm selling apples and the market for apples is perfectly competitive. The following table presents the costs of a firm. Use the given information to answer questions 35 - 42. Q AFC AVC ATC MC TC 1$300 $100 $400$100$400 2 150 75 225 50 3 100 70 170 60 4 75 72.5 147.5 80 5 60 80 140 11O| 6 50 90 140 140| Find the market price such that the firm's maximized profit = $0 Answer: The firm's maximized profit is $0 if the market price = $.

The cost data in the following table are for Marshall’s Meats, a perfectly competitive firm.   Round your answers to 2 decimal places.  Output Average Variable Cost AverageTotal Cost MarginalCost Total Cost 0 /   /   /   $ 95   1 $   $   $   115   2       125   3       150   4       200   5       270   6       350   7       450     a. Complete above the table. b. What is the break-even price?    Break-even price: $       c. What is the shutdown price?    Shutdown price: $ d. If the market price of the product is $50, what quantity will Marshall’s Meats produce? What will be its profit or loss?        Quantity: ;           : $ e. If the market price of the product is $100, what quantity will Marshall’s Meats produce? What will be its profit or loss?     Quantity: ;           : $

Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 80 70 60 ATC 50 40 30 AVC 20 MC O 10 10 20 30 40 50 60 70 80 90 100 QUANTITY OF OUTPUT (Thousands of jackets) PRICE AND COST PER UNIT (Dollars)

A perfectly competitive firm faces the short-run cost schedule shown in Table 1. Output 1 4 8 Total Cost 12 20 26 32 40 52 68 93 122 Table 1 A) Calculate average total cost (ATC=TC/Q), marginal cost (MC=ATC/AQ) and marginal revenue (MR=ATRIAQ) for each level of output. The price per unit of output is £16. B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? C) How much profit/loss is made at the optimum level of output? D) Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. E) If the firm is typical of other firms, what price will it charge in the long run? Explain.