Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Textbook Question
Chapter 13.2, Problem 2QQ
How does a competitive firm determine its profit-maximizing level of output? Explain. • When does a profit-maximizing competitive firm decide to shut down? When does it decide to exit a market?
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3. Show in a graph a situation when a competitive firm will minimise loss in the short run. Why will the firm continue operation despite making a loss? When will the firm shut down its operation in the short run?
2- What is the general decision rule used by perfectly competitive firms to maximize profits? On a graph, indicate the long- and short-run supply curves of the firm. Explain clearly why there is a difference. Why would a firm stay open and take losses in the short-run?
3. Why a competitive firm is price taker? Explain graphically why perfect
competition is preferable to consumers?
Chapter 13 Solutions
Essentials of Economics (MindTap Course List)
Ch. 13.1 - Prob. 1QQCh. 13.2 - How does a competitive firm determine its...Ch. 13.3 - Prob. 3QQCh. 13 - Prob. 1CQQCh. 13 - Prob. 2CQQCh. 13 - Prob. 3CQQCh. 13 - Prob. 4CQQCh. 13 - Prob. 5CQQCh. 13 - Prob. 6CQQCh. 13 - Prob. 1QR
Ch. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - A firm in a competitive market receives 500 in...Ch. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Suppose that each firm in a competitive industry...
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- How does a competitive firm determine its profit-maximizing level of out put? Explain. . When does a profit-maximizing competitive firm decide to shut down? When does a profit-maximizing competitive firm decide to exit a market?arrow_forwardCh12 Economicsarrow_forwardWhat prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?arrow_forward
- Will a perfectly competitive market display productive efficiency? Why or why not?arrow_forwardA single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How small is small?arrow_forwardHow does a perfectly competitive firm decide what price to charge?arrow_forward
- What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.arrow_forwardA9 The characteristics of a "perfectly competitive" market require that there is 1) a large number of firms, 2) producing products that are identical across firms, 3) in an industry where there are no barriers to entry. It's unlikely that any industry accurately reflects these extreme assumptions, but what industries can you think of that do display these characteristics at least to some extent? Try to identify the limits of your example in reflecting "perfect" competition.arrow_forward1. What two rules does a perfectly competitive firm apply to determine its profit maximizing quantity of output? 2. How does the average cost curve help to show whether a firm is making profits or losses?arrow_forward
- 19. Refer to the following diagrams which pertain to a purely competitive firm producing output q and the industry in which it operates. MC ATC AVC -MRP In the long run we should expect: A. firms to enter the industry, market supply to rise, and product price to fall. B. firms to leave the industry, market supply to rise, and product price to fall. C. firms to leave the industry, market supply to fall, and product price to rise. D. no change in the number of firms in this industry.arrow_forward3. Explain where a perfectly competitive firm's marginal revenue curve is located relative to price and demand. 4. What is the optimal output rule for profit maximization? Draw a graph to show the output level where a perfectly competitive firm maximizes profit.arrow_forwardRegulators in the European Union have charged Microsoft with illegally tying Internet Explorer (IE) to Windows and mandated that a version of Windows be offered stripped of IE. A news report suggested that when Microsoft launches Windows 7, it will charge a higher price for the IE-stripped version than the price for a full version that includes IE. Microsoft denied this report but announced that it would offer the full version of Windows 7 at a lower upgrade price. Source: computerworld.comarrow_forward
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