Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 6, Problem 9Q
To determine
In short run, the profit-maximizing firm will operate at a price lower than the average production cost.
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Chapter 6 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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- Determine a firm’s profit-maximizing decision in the short run.arrow_forwardWhat does zero economic profits in the long-run mean to the owner of a business operating in a perfect competitive market?arrow_forwardA 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 cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?arrow_forward
- Assume a profit maximizing firm's short-run cost is TC = 700 + 60Q. If its demand curve is P = 300 - 15Q, what should it do in the short run?arrow_forwardWhat are the options available to a firm when the market demand exceeds capacity?arrow_forwardIn the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?arrow_forward
- Why wouldn’t a firm just drop any product that isn’t selling inhigh enough volume to reach its break-even point?arrow_forwardWhy would a profit-maximizing, perfectly competitive form continues to operate for a period of time if price was greater than average variable cost but less than average total cost?arrow_forwardHas any particular firm in the perfectly competitive market found a way to differentiate or distinguish itself from its competitors? If so, what did the firm do? If not, what prevents the firm from differentiating itself?arrow_forward
- In the long-run equilibrium of a competitive market with identical firms, what are the relationships among price (P), marginal cost (MC), and average total cost (ATC)?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forwardPlease graph what the market looks like with a short decrease in demand and what one firm looks like with a short run decrease in demand. Please make sure to graph your answer with all necessary labeling.arrow_forward
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