ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?arrow_forwarda) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?arrow_forwardQuestion 18 Suppose a perfectly competitive firm faces the following situation: P = $10, output= 3,000, ATC= $8.50, MC $11, and AVC=$7.50. Which statement accurately describes the firm's situation? = O The firm incurs a loss and is minimizing its losses. O The firm carns a profit but should increase output to maximize its profits. O The firm is maximizing its profits. The firm earns a profit but should decrease output to maximize its profits.arrow_forward
- Looking to see how to resolvearrow_forwardWhich of the following is not a characteristic of a perfectly competitive market structure? O All firms sell identical products. O There are restrictions on exit of firms. O There are a very large number of firms that are small compared to the market. O There are no restrictions to entry by new firms.arrow_forwardAssume the firms in a perfectly competitive market are initially incurring economic losses. An increase in supply would cause existing firms' economic losses to decrease. True OR False?arrow_forward
- How does an increase in market demand for a product in a perfectly competitive market affectthe short-run and long-run equilibrium? Show on a diagram and discuss the adjustments firms make in terms of price and quantity to reach the new equilibrium. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardThese diagrams, pertain to a perfectly competitive firm producing output q and the industry in which it operates. In the long run we should expect: MC ATC AVC MR P Ono change in the number of firms in this industry. firms to leave the industry, market supply to fall, and product price to rise. firms to leave the industry, market supply to rise, and product price to fall. firms to enter the industry, market supply to rise, and product price to fall.arrow_forwardQUESTION 11 Consider the following setup for a perfectly competitive market: Suppose that for the firm, TC=625+ Q² and MC=20, and for the industry, demand is given by P= 100-Q and supply is given by S=Q. Solve for the market output and corresponding price. O Q=50, P-50 O Q=25, P=75 O Q=75, P=25 O Q=50, P=25arrow_forward
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