The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market. Instructions: Use the nearest whole numbers on the graph when calculating numerical responses below. -n a. What level of output should this firm produce in the short run? 7 units b. What price should this firm charge in the short run? $ 90 c. What is the firm's total cost at this level of output? $140 d. What is the firm's total variable cost at this level of output? Se. What is the firm's fixed cost at this level of output? $f. What is the firm's profit if it produces this level of output? Instructions: If the firm is taking a loss, enter this as negative (-) profits. Sg. What is the firm's profit if it shuts down? Instructions: If the firm is taking a loss, enter this as negative (-) profits. $h. In the long run, should this firm continue to operate or shut down? $ 48 44- ཧཱུྃ : 8 MC ATC 40- 36- 32- 28 24- 20 16- 12- Quantity D'=MR AVC AFC 9 10 11

The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market. Instructions: Use the nearest whole numbers on the graph when calculating numerical responses below. -n a. What level of output should this firm produce in the short run? 7 units b. What price should this firm charge in the short run? $ 90 c. What is the firm's total cost at this level of output? $140 d. What is the firm's total variable cost at this level of output? Se. What is the firm's fixed cost at this level of output? $f. What is the firm's profit if it produces this level of output? Instructions: If the firm is taking a loss, enter this as negative (-) profits. Sg. What is the firm's profit if it shuts down? Instructions: If the firm is taking a loss, enter this as negative (-) profits. $h. In the long run, should this firm continue to operate or shut down? $ 48 44- ཧཱུྃ : 8 MC ATC 40- 36- 32- 28 24- 20 16- 12- Quantity D'=MR AVC AFC 9 10 11

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 12P

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Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Use the graph below of a perfectly competitive firm to answer these questions and assume that the industry price is $P4 Price P₂ aaaa P₁ MC AVC ATC Q₁Q₂ Q3 Q4 Quantity 1. At an industry price of P4, what is the profit mazimizing level of output and what type of profit/loss is the firm earning 2. If there is a decrease in industry demand causig the industry price to fall to P2, what is the profit maximizing level output, pr position of the firm or is this firm producing in the short run? 3. What industry price represents the long run profit position for the firm?
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60
A Aa Po E - F 3 = T DA Normal No Spacing 色、 Heading 1 Find Replace Select S Paragraph Styles √ Editing 4) Consider the price and quantity data below for a perfectly competitive firm producing mousetraps. Price ($) Quantity 1000 5 5 1250 5 1500 5 1750 5 2000 TABLE 3 a) Refer to Table 3. Suppose this firm is producing 1250 mousetraps and its average total cost is $4 per unit. What is the firm profit or losses situation? b) Refer to Table 3. Suppose this firm is producing 1500 mousetraps and its average total cost is $5.10 per unit. What is the firm profit or losses situation? c) Refer to Table 3. Suppose this firm is producing 2000 mousetraps and average variable cost is $5.50. What level of economic profit is this firm earning? tohle below to answer the following questions.
Assume that Harry Ellis produces table lamps in the perfectly competitive table lamp market. OUTPUT PER WEEK TOTAL COSTS AFC AVC ATC MC 0 $100 1 150 2 175 3 190 4 210 5 240 6 280 7 330 8 390 9 460 10 540 Fill in the missing values in the table. Suppose the equilibrium price in the table lamp market is $50. How many table lamps should Harry produce, and how much profit will he make? If next week the equilibrium price of table lamps drops to $30, should Harry shut down?
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: ; : $
3 The figure below shows the cost curves for a profit-maxmizing firm in a periecny competitive narket. If the market price is $30 and if the firm is producing outpul. the amount of its total variable cost? Price TVC and cost TO ATCHO MC ATC AVC PAL $40.50 36.00 30.00 MR 22.00 7LEE 20.00 130 180 240 Quantity O S7,200 b. $6,480 C. $5,400 d. $3,960
Next question ice and cost (dolars per par) The graph shows the long-run situation facing a producer of running shoes. In the market for running shoes, all the firms face a similar demand curve and have similar cost curves 120- Draw a vertical arrow that shows the firm's markup at the profi-maximizing quantity. Label R. MC t004 What is a fim's markup? /ATC A fem'u markup is the amount by which exceeds OA price; average total cost 60 OB. price, marginal cost OC. average total cost marginal revenue OD. average total cost marginal cost 20- Describe the market of a firm in perfect competition MR O 25 7 100 1is e ths 200 zis Quantity (pain of shoes per week) A firm in perfect competition has OA a markup similar to a firm in monopolistic competition OB. no markup > Draw only the objects specfied in the question Oc. a negative markup O D. a markkup similar to a monopoly
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 : $
Review View Tell me what you want to do... Aa - 三 AaBbCcDc AABBCCI AaBbCcD AaBbC ,吵,A T Normal Body Text 1 No Spac. Heading 1 Paragraph Styles Question 2. MC ATC A VC 2.8 10 11 12 Quan lily (per day 8 The graph above skows the cost structure of a perfectly competitive firm. Use the graph above to answer the following questions. a. At which price the firm will earn zero economic profit b. What is the shut-down price? c. Above what price the firm will earn positive economic profit? d. At what price range the firm will incur a loss? Why would it continue the production? Explain. e. Show the supply curve of the firm on the graph. Explain. | 99+ ASUS Price and cosb (dollas)
Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the price of a doughnut is 10 cents, then this firm: 0.35 Marginal Cest 0.30 0.25 0.20 Average Tetal Cost 0.10 0.05 10 20 30 40 50 e 70 B0 90 Quantity oughnuts/ay O should shut down. O will earn an economic loss. O should produce 50 doughnuts. O should shut down in the long run.