Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12.5, Problem 3RQ
To determine
What happens to output, price, and economic profit in the short run and in long run when the new technology that reduces production cost is adopted?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A firm that is producing the
quantity at which marginal cost
exceeds both average total cost
and the market price will
increase its economic profit by
a. producing a smaller
quantity b. producing a smaller
quantity c. raising the price to
equal marginal cost d.
producing the quantity that
minimises average total cost e.
producing a larger quantity
60. In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?
A. an increase in labor costs
B. a decrease in market demand
C. an increase in market demand
D. an increase in the number of firms
i. Calculate the marginal cost, marginal revenue and profit for each unit of production.
ii. How many units should the firm produce to maximise profit?
Chapter 12 Solutions
Microeconomics (13th Edition)
Ch. 12.1 - Prob. 1RQCh. 12.1 - Prob. 2RQCh. 12.1 - Prob. 3RQCh. 12.1 - Prob. 4RQCh. 12.2 - Prob. 1RQCh. 12.2 - Prob. 2RQCh. 12.2 - Prob. 3RQCh. 12.3 - Prob. 1RQCh. 12.3 - Prob. 2RQCh. 12.3 - Prob. 3RQ
Ch. 12.4 - Prob. 1RQCh. 12.4 - Prob. 2RQCh. 12.5 - Prob. 1RQCh. 12.5 - Prob. 2RQCh. 12.5 - Prob. 3RQCh. 12.6 - Prob. 1RQCh. 12.6 - Prob. 2RQCh. 12.6 - Prob. 3RQCh. 12.6 - Prob. 4RQCh. 12 - Prob. 1SPACh. 12 - Prob. 2SPACh. 12 - Prob. 3SPACh. 12 - Prob. 4SPACh. 12 - Prob. 5SPACh. 12 - Prob. 6SPACh. 12 - Prob. 7SPACh. 12 - Prob. 8SPACh. 12 - Prob. 9SPACh. 12 - Prob. 10APACh. 12 - Prob. 11APACh. 12 - Prob. 12APACh. 12 - Prob. 13APACh. 12 - Prob. 14APACh. 12 - Prob. 15APACh. 12 - Prob. 16APACh. 12 - Prob. 17APACh. 12 - Prob. 18APACh. 12 - Prob. 19APACh. 12 - Prob. 20APACh. 12 - Prob. 21APACh. 12 - Prob. 22APACh. 12 - Prob. 23APA
Knowledge Booster
Similar questions
- There are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allows ABC to offer large quantities at favorable prices. a. ABC gained market power through economies of scale government protection control of an important input . b. ABC’s market power does does not guarantee that the firm makes an economic profit.arrow_forwardHELP PLEASE!!! There are two questions here. 1. Is the firm maximizing profit? 2. What quantity of output should the firm produce in the long run?arrow_forwardWhen price equals marginal cost,Select one:A.the industry is in long-run equilibrium.B.firms make positive profits.C.the marginal benefits of consuming an extra unit of the good exactly equals the marginal cost to society of producing the good.D.firms make zero profits.arrow_forward
- d. What is the deadweight loss in this market, if any? e. How does a firm decide to increase or decrease output? i. What do they do when marginal revenue is less than marginal cost? ii. What do they do when marginal revenue is more than marginal cost? f. When does a firm decided to shut down verses temporarily stopping production? g. In this market the demand curve is what? i. Short run ii. Long run h. In this market the supply curve is what? i. Short run ii. Long runarrow_forwardQuestion 1 A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?arrow_forward20. Paulina sells beef in a competitive market where the price is $6 per pound. Her total revenue and total costs are given in the table below. Fill out the table. At what quantity does marginal revenue equal marginal cost? What is the profit-maximizing quantity?arrow_forward
- Basti’s Coffee operates in a competitive market. The short run price in the coffee market is equal to Basti’s Coffee average variable cost. a. Using two correctly labeled graphs show the coffee market side by side with Basti’s Coffee. Clearly indicate which graph represents the market and which represents Basti’s Coffee. In your graph identify: i. price and quantity in the coffee market (3) ii. price and quantity for Basti’s Coffee (3) iii. The area of economic profit or loss for Basti’s Coffee (3)arrow_forwardWhat is long run and short run production? What is immediate market periodarrow_forwardIn a competitive market with free entry and exit from the market a permanent rise in demand will lead to Select one or more: a. normal profits being made in the long-run b. excess profits being made in the short run (before new firms can enter) c. entry by new firms d. a permanent rise in pricesarrow_forward
- what is the effect on the market price and output of hambyrgers with reference to the following? A. An increase in the income of consumers B. wide spread disease of beef C. Dramatic improvement in fast food technologyarrow_forwardBasti’s Coffee operates in a competitive market. The short run price in the coffee market is equal toBasti’s Coffee average variable cost.a. Using two correctly labeled graphs show the coffee market side by side with Basti’s Coffee. Clearlyindicate which graph represents the market and which represents Basti’s Coffee. In your graph identify:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffee iii. The area of economic profit or loss for Basti’s Coffeeb. In a new set of graphs for both the market and Basti’s Coffee, show the long run adjustments in eachof the following:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffeearrow_forwarda perfectly competitive market over the long run, a. an increase in market demand or a decrease in firms' costs will lead to a decrease in the number of firms operating within the market. b. an improvement in production technology will increase profits at fust, but those profits will be competed away over time as more firms enter the industry and reduce market price. c. market price will equal maximum possible average total cost in long-run equilibrium. d. an increase in demand will cause the final market equilibrium to be at the original price but at a lower output level.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning