Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 2CQQ
To determine
The condition of the competitive firm maximizing the profit by choosing the quantity.
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Students have asked these similar questions
a. Draw the marginal cost and average total cost curves for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do.Â
b. Does a competitive firm’s price equal its marginal cost in the short run, in the long run, or both? Explain.
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
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A. keep producing in the short run but exit the market in the long run.
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B. shut down in the short run but return to production in the long run
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C. shut down in the short run and exit the market in the long run.
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D. keep producing both in the short run and in the long run.
In Long-Run Competitive Equilibrium it is included as a cost and are not included in economic profit.
a.
profit maximization
b.
zero profit condition
c.
normal profit
d.
none of this
Chapter 14 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - How does a competitive firm determine its...Ch. 14.3 - Prob. 3QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQCh. 14 - Prob. 6CQQCh. 14 - Prob. 1QR
Ch. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Suppose that each firm in a competitive industry...
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Similar questions
- The supply curve of a perfectly competitive firm is: Multiple Choice a. the marginal cost curve only if price exceeds average variable cost. b. the marginal cost curve only if price exceeds average total cost. c. the average total cost curve only if price exceeds average variable cost. d. nonexistent.arrow_forwardi. Calculate the marginal cost, marginal revenue and profit for each unit of production. ii. How many units should the firm produce to maximise profit?arrow_forwardIn the long-run equilibrium in a perfectly competitive market,: a . the firms make an economic profit . b. the firms' owners make a normal profit . C. the average total cost is maximized . d . marginal cost is at a minimum .arrow_forward
- A competitive firm maximizes profit by choosing thequantity at whicha. average total cost is at its minimum.b. marginal cost equals the price.c. average total cost equals the price.d. marginal cost equals average total cost.arrow_forwardCost MC Select one: ATC AVC ABC D Quantity C in the figure above represents the output level where the firm Quantity a. maximizes profits in the short-run. b. minimizes total costs in the short-run. C. maximizes profits in the long-run. d. minimizes marginal costs in the long-run. e. None of the above.arrow_forwardProfits are maximized at the output at which marginal cost equals marginal revenue. If the market price falls below the minimum average variable cost: a. the firm should produce less. b. the firm should produce more. c. the firm should shut down. d. none of the abovearrow_forward
- Consider the following data: equilibrium price = $7.50, quantity of output produced 100 units, average total cost = $9, and average variable cost = $8. What will the firm do and why? = a. Shut down in the short run, because price is below average variable cost. b. Shut down in the short run, because price is below average total cost. c. Continue to produce in the short run, because price is greater than average variable cost. d. Continue to produce in the short run, because firms are always stuck with having to produce in the short run.arrow_forwardTomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which sell for $30 a bushel. At this level of output, the marginal cost is $30 a bushel, average variable cost is $30.50 a bushel, and average total cost is $34.50 a bushel. (a) What is the firm’s total fixed cost? You must show your work.arrow_forward1.The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. A. The price of fertilizer must be less than marginal cost.  B. The price of fertilizer must be equal to average variable cost.  C. The price of fertilizer must be less than average total cost.    2. If firms in the market are producing output but are currently making economic losses,_________ illustrates the present situation for the typical firm in the market, and_________ indicates the corresponding supply curve.  Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. A.The quantity supplied by each firm will decrease.  B.The total quantity supplied to the market will decrease.  C.The…arrow_forward
- If a profit-maximizing firm in a perfectly competitive market is currently producing the output where (price - average variable cost) > average fixed cost, the firm is: A. making a positive economic profit. B. making a zero economic profit. C. suffering an economic loss. D. None of these.arrow_forwardA competitive firm maximizes profit when marginal cost: a. equals the price. b. is less than the price. c. is minimized. d. is greater than the price.arrow_forwardA perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its Select one: a. average variable cost. b. marginal revenue. c. average total cost. d. average fixed cost. Clear my choicearrow_forward
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