What is the most important decision a perfectly competitive firm must make in orderto maximize profit?what quantity to producewhat price to chargewhat quality to producewhat quantity of labor is needed

In a perfectly competitive market, there are many buyers and sellers. The good produced is…

Answered: What is the most important decision a…

What is the most important decision a perfectly competitive firm must make to maximize profit? what quantity to produce what price to charge what quality to produce what quantity of labor is needed

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...

See similar textbooks

Related questions

Q: If a consumer has rational, monotonic, and convex preferences, which of the following is true concer...

A: A change in the price of a product leads to a change in demand for that product. This is called the ...

Q: If monopoly power is NOT protected by governments,

A: To find : What happens if monopoly power is not protected by government.

Q: A certain machine has a initial cost of 50,000 and a book a value of 15,811.39 after five years. Fin...

A: According to the information provided in the question: Total accumulated depreciation (for 5 years)=...

Q: Based on this model, households earn income when purchase in markets for factors of production. Supp...

A: The circular flow of income model states that money flows from firms to households in the factors of...

Q: 4. Consider the general multiplicatively separable utility function given by u (x1,x2) = pu1 (x1) u2...

A: Given Utility function U=μX1X2Budget consraint=P1X1+P2X2=WW= income of the consumerP1= price of good...

Q: Why is it helpful to track your spending for 2 months? a. You can receive higher interest rates for ...

A: As an individual who make expenditure on different goods and services according to his interest, nee...

Q: Suppose Yvette just sat down to enjoy the Double Stack burger that she purchased for $1.00. Her frie...

A: * SOLUTION :- Based on the given information the answer is provided below.

Q: Elinore is asked to invest $4,900 in a friend's business with the promise that the friend will repay...

A: Opportunity cost: - opportunity cost is a forgone benefit that we could have earned by applying all ...

Q: In the short run, what would be the result of an increase in the monetary base? Assume the reserve r...

A: "Correct option- e i.e. nominal interest rate falls."

Q: A debit card differs from a credit card in that Question 16 options: a) a credit card is a l...

A: A credit card is a card that allows the cardholder to borrow money from a financial organisation, us...

Q: Investment can be increased both by reducing taxes on private saving and by reducing the government ...

A: Investment can be increased both by reducing taxes on private savings and by reducing the government...

Q: This argument is valid (use the Venn diagram to determine it): No X are Y Therefore, some non-X are ...

A: The statement says that No X are Y, it implies that the intersection between X and Y is 0. There is ...

Q: 7. Good X is produced in a competitive market using input A. Explain what would happen to the supply...

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the questio...

Q: 2. Why does local non-satiation of preferences imply that a consumer would always choose a bundle on...

A: Among the very ideas of microeconomics that form the basis of consumer theory, one of the most impor...

Q: If the marginal propensity to consume increases, we should expect that

A: GIVEN If the marginal propensity to consume increases, we should expect that Is

Q: You are paying a series of five constant-dollar (or real-dollar) uniform payments of $2,295.9 beginn...

A: Given that, Uniform payment of $2295.9 The inflation rate is 32.99% The market interest rate is also...

Q: farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into ...

A: Disclaimer: Since you have posted a question with multiple sub-parts, we will solve the first three ...

Q: In the aftermath of the Great Recession, the Beveridge cuve in the US... A. ...has shifted to the ri...

A: The Beveridge curve is a graphical representation of the relationship between the unemployment rate ...

Q: Q)The inverse demand function for good x is defined by the equation p = 214 - 5q, where q is the nu...

A: Given: inverse demand function: p = 214 - 5q, inverse supply function:p = 7 + 4q

Q: Suppose that the employment rate is 55.0% and unemployment rate is 5.0%. What is the participation r...

A: The participation rate is the percentage of the total population employed and actively looking for e...

Q: Can Entreprenuership be thougth?

A: Entrepreneurship cannot be taught in the traditional sense of sitting in a classroom listening to a ...

Q: A money market mutual fund invests in Question 21 options: a) a combination of stocks, bonds...

A: A money market mutual fund is a type of fixed income mutual fund that invests in debt securities cha...

Q: depreciation rate of 8.9 %. What does this country's savings rate need to be in order to sustain a s...

Q: 15. Justine buys a television set from a merchant who asks P 1,250.00 at the end of 60 days (cash in...

A: Let the cash price today be p. Assumption: cash price is worth 8%. 8% interest on cash price=0.08x P...

Q: Question 38 I Long-term bonds are generally A less risky than short-term bonds and so pay higher int...

A: Long term generally refers to a period of maturity which lies between 10 years to 30 years.

Q: If two goods were perfect substitutes of each other, it necessarily follows that

A: To find : what happens when two goods are perfect substitutes.

Q: Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph be...

A: Answer: According to the above figure, if the supply curve shifts from AS to AS2 it means the firms...

Q: What is the likely impact on equilibrium price and quantity in the mock meat market? Describe which ...

Q: The the nominal interest rate, the is the quantity of money demanded. O a. more variable; smaller O ...

A: The money demand is a function of the price level, income level, and nominal interest rate. The mone...

Q: 4) Consider the following production function F(K, L) = 6K° 25 L05 a) Does it display constant, incr...

A: Introduction Here is a Cobb Douglas production function has given. a) The given production function ...

Q: Due to the increased use of credit carus, peup O a. a rightward shift in the demand for money curve....

A: The money demand curve is downward sloping from left to right. It shows an inverse relationship betw...

Q: Devlin is a computer programmer who earned $30,000 in 2011. But on January 1, 2012 he opened a custo...

A: * SOLUTION :- Based on the given information the answer is (a) the Devlin's opportunity cost is = ...

Q: Compatibalism about free will is the thesis that

A: To find : What is thesis about compatibalism about free.

Q: Consider the following 2-player game. The game has a Nash equilibrium in mixed strategies. When both...

Q: Discuss how the interdependence of input markets for labor, capital, and land might affect supply, d...

A: The market for land, labor, and capital is known as factors market that influence the demand and sup...

Q: Which one of the following statements is correct? * In a monetary economy there always ha: be a doub...

A: As per the guidelines answer is given to three sub-parts: 1) "Money can never lose its usefulness as...

Q: The benefits of economic growth, particularly as measured by real GDP per capita, include greater me...

A: Answer -1 For the vast majority of people, the benefits of economic expansion as measured by Real G...

Q: In the short run, if a marginal cost of a firm in a competitive industry is increasing while its ave...

Q: Consider an economy with a Cobb-Douglas production function. Assume that the labour income share par...

A: Introduction Its answer is b) the economy is in steady state so output growth is zero. investment ra...

Q: How has the power of the executive branch shifted over time?

A: To find : How power of executive branch has changed over time.

Q: Suppose you are given the following information: Qs = 100 + 3P Qd = 400 – 2P where Qs is the qua...

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for yo...

Q: Banks can lower the cost of information production by applying one information resource to many diff...

A: The expense of funds is a reference to the loan fee paid by monetary organizations for the assets th...

Q: e accompanying table shows data from the World Bank, World Development Indicators, for real GDP per ...

Q: QUESTION 5 5. You are given the following information about an economy: $millions GDP at Market Pric...

A: Since you have posted a question with multiple sub-parts, we will solve first three sub- parts for y...

Q: 50. The present worth of of P40,000 in the first year and amounts o increasing by P3,000 per year th...

A: PV=40,0001(1+0.13)1+43,0001(1+0.13)2+46,0001(1+0.13)3+49,0001(1+0.13)4+52,0001(1+0.13)5 =3539.2...

Q: What are some ways congress has reacted to the expansion of presidential power?

A: To find : Ways congress has reacted to expansion of presidential power.

Q: 20 (in tons) 18 20 (in tons) 18+ 16 16 14 14 12 12 10- 10 2. +++ 2468 10 12 14 16 18 20 Psh (te ) 24...

A: Production possibility frontier shows different combinations of two goods that can be produced by an...

Q: 5) A person with a current wealth of $100,000 who faces the prospect of 25 percent chance of losing ...

A: Given information Initial wealth=$100000 Loss probability=0.25 Loss amount= $20000 Utility function=...

Q: The buyer of a set of computer was offered the options of paying P 35,000.00 cash or P 40,000.00 at ...

A: Simple interest method of interest is the method by which interest is charged on the principal amoun...

Q: The demand and supply functions of two related goods are given by Qd1 = 300 – 50P1+ 20P2 Qs1 = -200 ...

A: Equilibrium: Equilibrium is the state in which market supply and demand balance each other, and as a...

Question

What is the most important decision a perfectly competitive firm must make in order
to maximize profit?
what quantity to produce
what price to charge
what quality to produce
what quantity of labor is needed

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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?
Suppose the market for fresh pork is a competitive market. Initially, it is operatingat its long-run competitive equilibrium at a market price of $50.Owing to the spread of COVID-19, many people turn to buying frozen meat oncea week rather than fresh pork every day. As a result, the market price of fresh porkreduces to $30.a. With the aid of a pair of market-and-firm diagrams, illustrate how thiswould affect the equilibrium price and quantity in the fresh pork market andthe output of a typical butcher of fresh pork in the short-run.b. Suppose, for the situation in (a), the average cost of a typical butcher offresh pork is $40, which includes $15 on buying meat from suppliers, $12on paying rent, $8 on paying hourly wages on staff, and $5 on other costs.Explain whether a typical butcher should shut down in the short run.
What is special about a purely competitive market?
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60
The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. Price ($/bushel) 60 50 40 30 20 10 0 0 ΤΑ 10 20 30 40 50 60 70 80 Quantity (bushels/month) Select one: O A. 50 bushels. C If mushrooms sell for $10 per bushel, and Moe chooses the profit-maximizing quantity, he will gather: B. 30 bushels. O C. 20 bushels. O D. zero bushels.
What are the four conditions of a purely competitive market?
What is the equilibrium or profit-maximizing quantity of production for a perfectly competitive firm?
bo Use the table below to calculate the accounting and economic profit for Abner's Apple Art. Item Macmillan Learning Total revenue Costs Apples Utilities Lease Abner's forgone wages Numbers in the table are in thousands What is Abner's Apple Art's accounting profit? What is Abner's Apple Art's economic profit? Amount $220 $30 $20 $20 $70 Accounting profit = $ Economic profit = $ thousand thousand
4. Profit maximization in the cost-curve diagram Suppose that the market for black sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. PRICE (Dollars per sweater) 50 y ATC AVC 45 40 35 30 25 20 15 10 5 0 MC + 02 4 6 8 10 12 14 16 QUANTITY (Thousands of sweaters) 18 20 Profit or Loss ?
How low would the market price haveto fall before the firm decided to produce nothing?
In a perfectly competitive market, when are economic profits possible? O Long-run O Economic profits are always zero, firms earn normal profit O Any time, it depends on the indivual firm O Short run
Suppose that the market for cashmere sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 100 90 Profit or Loss 80 70 60 40 ATC 30 20 MC AVC 10 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of sweaters per day) In the short run, at a market price of $45 per sweater, this firm will choose to produce 45,000 sweaters per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $45 and the firm chooses to produce the quantity you already selected. Note: In the following question, enter a positive number, even if it represents a loss. The area of this rectangle indicates that the firm's would be thousand per day in the short run. PRICE (Dollars per sweater)