The graph below shows cost curves for a firm operating in a perfectly competitive market. 20+ Note: Blue curve = AVC Green curve = ATC Red curve = MC Black line is demand Quantity of Bags Suppose that the equilibrium price is $14.19 (black line). This firm is earning O Zero Economic Profits (Break-even point) O Profits OLosses Price of Bags

The graph below shows cost curves for a firm operating in a perfectly competitive market. 20+ Note: Blue curve = AVC Green curve = ATC Red curve = MC Black line is demand Quantity of Bags Suppose that the equilibrium price is $14.19 (black line). This firm is earning O Zero Economic Profits (Break-even point) O Profits OLosses Price of Bags

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which describes the firms supply curve for the short run with perfect competition? O The section of MC that is above AVC O The section of MC that is above ATC There is no supply curve since it depends on the slope of demand O The section of ATC to the right of its intersection with MC Which describes the long run equilibrium situation for a firm in perfect competition? O Demand is sloping downward and tangent to ATC Demand is horizontal and tangent to the bottom of ATC O Demand is tangent to AVC O There are positive economic profits to motivate firms to keep producing
Question 21 please solve
PRICE OR COST (dollars per unit) D U K QUANTITY E MC O Average variable costs at the output E. O Total variable costs at the output K Total fixed cost. Total variable costs at the profit-maximizing output. ATC AVC MR Refer to Figure 7.4 (above) for a perfectly competitive firm. The area OCFE is equal to:
A mattress company operates in a perfectly-competitive environment. If the firm can increase its profits by increasing output, O price is greater than marginal cost. O price is less than marginal cost. O price is equal to marginal cost. losses are minimized.
3
The firm depicted in Figure 7-10 is currently at point F producing 200 units of output per day. If it decides to increase its output level to 375 units, then it will Q 40 Figure 7-10 Dollars per Unit ATC LRATC ATC 200 375 Units of Output O adjust from point F to point G in the short run O be unable to adjust to point G in the short run because some inputs are fixed O be unable to adjust to point G in the long run because no inputs are fixed O be unable to adjust to point H in the short run because some inputs are fixed O adjust from point F to point H in the long run
Price (S) AB UD A) $(60-C) × 3 Quantity B) $(60-D) x 2 OC) $(60-B) × 5 OD) $(60-B) × 4 O E) $(60 - A) × 5 MC ATC Refer to the figure above, which indicates the short-run cost data for a typical firm in a perfectly competitive industry. If the price faced by a perfectly competitive firm is equal to $60, then this firm will earn profits of......if it maximizes profits. p = $60 AVC
Which of the following is always true for the profit-maximizing firm in a perfectly competitive output market (as discussed in Chapter 8): O a. The economic profit at the profit maximizing output is negative. O b. The profit maximizing output is equal to the price given by the market. Oc. The economic profit at the profit maximizing output is positive. O d. At profit maximizing output, the slope of the total cost curve is equal to the slope of the total revenue curve. Say you have following Engle curve (which are the dashed lines) relating household income and pollution: FIGURE 1.-POLLUTION EMBODIED IN HOUSEHOLD CONSUMPTION: PM10 O 1984 2012 10 15 Average After-Tax Income (10,000 2002 $) Which of the following statements about this Engle curve is true in 2012? Select one: O a. Household pollution is a Giffen good. O b. Household pollution is a normal good. O c. Househald pollution is an inferior good. O d. Household pollution starts as an inferior good, and then becomes a normal good.…
Suppose the costs of a perfectly competitive firm are given by TC = 30 +3Q+0.5Q2 and MC= 3+Q. The supply equation of the firm is, therefore, Q = -3 + P. If the market price is $13, what is the total profit of the firm? O $20 $130 -$110 O $10
Price (dollars) 8 7 6 5 4 3 2 1 0 80 O increase; increase; increase O remain same; remain same; decrease O decrease; remain same; decrease O decrease; decrease; decrease Short-run Short-run MC AC 100 110 The graph above shows the cost curves for a firm selling in a perfectly competitive market. If the market demand falls due to a recession, the long run equilibrium price will output will ., the firm's and industry output will Output (per day) Long-run AC
What is a price taker? A price taker is O A. a firm with a downward-sloping demand curve. O B. a firm that is unable to affect the market price. Oc. a firm with a perfectly inelastic demand curve. O D. a firm that has the ability to charge price greater than marginal cost. O E. a firm that does not seek to maximize profits. When are firms likely to be price takers? A firm is likely to be a price taker when O A. it sells a differentiated product. O B. barriers to entry are substantial. OC. it has market power. O D. it represents a small fraction of the total market,. O E. firms in the industry collude.
Suppose we have a firm in a perfectly competitive market. Assume that we have the usual shaped cost curves. At a market price of $15 the profit maximizing firm produces 53 units. Something changes that causes the firm to produce a quantity of zero at a price of $15 in the short-run. Which of the changes below can explain the change in the firm's behavior? O An increase in the fixed cost and a decrease in the marginal cost. O An increase in the fixed cost. O An increase in the marginal cost. O A decrease in the market price.