Q: If a firm shuts down temporarily, it will incur loss equal to
A: To find: If a firm shuts down temporarily, it will incur loss equal to
Q: Why should a firm shut down if its average variable cost curve is above the price of their product?
A: If the price of the product is below the average variable cost (AVC), then the firm will shutdown.…
Q: Will a Perfectly competitive market display productive efficiently? Why or why not?
A: A perfectly competitive market is the one where there are a large number of buyers (consumers) or…
Q: normal profit
A: There are different market structures like: ‘Perfect Competition’, ‘Monopoly’, ‘Monopolistic…
Q: was the west fraser timber company always been classified as perfectly competitive market in the…
A: When talking about the competitiveness of a firm, it can be said that it is determined by the market…
Q: A firm should shut down in the short run if it is not covering its
A: To find : When should firm shut down.
Q: Can you explain to me why in the short run, firms only use variable cost to determine whether or not…
A: Shutdown point is a point of production where a firm decides not to continue production as producing…
Q: Many firms in the United States file for bankruptcy every year, yet they still continue operating.…
A: The costs of production include both the fixed costs as well as the variable costs. The fixed costs…
Q: Would a perfectly competitive firm produce if price were less than the minimum level of average…
A: No, a perfectly competitive firm would not produce if price were less than the minimum level of…
Q: Why would a firm that incurs losses choose to produce rather than shut down
A: Shut down point refers to the point where the firm stops its production process. It is the point…
Q: Would independent trucking fit the characteristics of a perfectly competitive industry? and why?
A: A perfectly competitive market is where there are many numbers of buyers and sellers, with…
Q: Refer to the figure below. If the firm is producing the level of output that maximizes profit, its…
A: Answer: To find= total variable cost at the equilibrium. Equilibrium is a point where Marginal cost…
Q: Why would a firm that is making loss in the short-run choose to operate rather than shut down?
A: A short run is a time period in which a firm incurs both fixed cost and variable cost. A long run is…
Q: How much should a firm sell of a particular product in order to maximize profit? What factor does it…
A: A firm should maximize profits and bring in the output level, where there would equilibrium point…
Q: Why would a profit-maximizing, perfectly competitive form continues to operate for a period of time…
A: A perfect competitive firm who is facing losses in the market will decide to shut down if the price…
Q: What are the options available to a firm when the market demand exceeds capacity?
A: Here's a set of features that assist companies in proactively addressing excess demand and…
Q: In order to maximize profit, the firm will choose to produce where marginal revenue is equal to…
A: Marginal Revenue refers to the additional revenue earned by producing an additional unit of output.…
Q: You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you…
A: There is a difference between the cost function in the short-run and in the long-run due to which…
Q: Explain how market competition affect the mark –up in price setting and the fraction of the marginal…
A: If there is market competition then setting mark-up price will be affected a lot. Let's understand…
Q: Under what conditions will a firm shut down temporarily? Explain.
A: One of the classifications of a firm’s costs is fixed cost (FC) and variable cost(VC). Fixed costs…
Q: Determine the output level that will maximize economic profit.
A: Economic profit is the difference between the sum of explicit and opportunity costs from the revenue…
Q: Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.
A: Firm would shut down temporarily,if it is not able to cover the fixed cost. For this,price has to be…
Q: If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm…
A: In a market, an optimal or a Profit Maximizing quantity for a firm is when it is producing at a…
Q: Firms always lose money in a long-run industry equilibrium, true or false?
A: Firms always lose money in a long-run industry equilibrium, true or false.
Q: Why is the marginal revenue of a perfectly competitive firm equal the market price?
A: Marginal revenue: it refers to the additional revenue received from the sale of an additional good.…
Q: If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm…
A: A firm will maximise profit where marginal revenue is equal to marginal cost.
Q: In the short run, if a firm is having economic losses, but the profit is greater than the average…
A: The following problem has been solved as follows:
Q: At what output rate does the firm maximize profit or minimize loss?
A: After marginal revenue exceeds marginal cost,at that output rate firms maximize profit.
Q: Why a competitive firm is price taker? Explain graphically why perfect competition is preferable to…
A: When the following conditions exist, firms are said to be in perfect competition: (1) many firms…
Q: Using curves, graphically, a firm will shutdown if what? What is an output at which the firm makes a…
A: Economic profit refers to the excess of total revenue over total cost. To calculate the economic…
Q: How would you calculate the marginal cost of your firm's output? (think of a single product, not an…
A: Marginal cost can be understood as the additional cost incurred by the firm to produce an additional…
Q: In the long run, any firm will eventually leave the industry if
A: In the long run, any firm will eventually leave the industry if price :
Q: How do the entry and exit of firms in a purely competitive industry affect resource flows and…
A: Answer - Need to find - How do the entry and exit of firms in a purely competitive industry affect…
Q: You witnessed new firms entering a competitive market. What can you infer for the existing firms in…
A: In a market, new firms generally enter if they can see an incentive to generate profit and it is the…
Q: In a perfectly competitive market all producers sell
A: Firms under perfect competition cannot influence the price at which goods and services are sold in…
Q: What is the shutdown decision of the firm? How should a firm decide whether to continue business or…
A: For a perfectly competitive company, where the total revenue of the company, i.e. the product of its…
Q: Match the words from the list below to complete the following statement A price taker firm will…
A: There are large number of firms in perfect competition selling identical goods with no barriers to…
Q: If a firm sells its output at a price greater than ATC, it will earn economic profit. Is this…
A: A firm produces at a point where the marginal revenues are equal to the marginal costs.
Q: Describe a firm’s decision to shut down and when to exit the market,and explain the difference…
A: Perfect competition is a market structure that has a large number of buyers and sellers who have…
Q: At the profit-maximizing output level, what will be the relationship between the perfectly…
A: A profit-maximizing output level is when that gives highest returns to the firm as any change in…
Q: Decide whether a firm making short-run losses should continue to operate or shut down its…
A: In the short-run, a profit-maximizing firm will continue producing a positive amount of output even…
Step by step
Solved in 2 steps
- What is the Optimum level of the output for the firm? How do you know? Explain your answer. What is the maximum price the firm can charge? At this price and output combination does the firm make economic profit of economic loss? How do you know? Explain your answer. Calculate the economic profit or loss? Show the formula you used and your calculations. What is the breakeven price? How do you know? What is the shut down price?You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you infer about the profits of this firm?Strictly speaking, pure competition has never existed and probably never will. Then why study it?
- Why wouldn’t a firm just drop any product that isn’t selling inhigh enough volume to reach its break-even point?Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changed his price to $8. Why? What about a price of $5?Determine the output level that will maximize economic profit.
