EBK MANAGERIAL ECONOMICS
4th Edition
ISBN: 9780100546622
Author: FROEB
Publisher: YUZU
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Chapter 9, Problem 10MC
To determine
Profit.
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Below is a graphical illustration of a
typical firm operating in a
monopolistically competitive industry:
P5
P4
P3
P2
P1
H
Q1 Q2 Q3
Refer to the graph above to answe
question. Which of the following
statements is correct?
ATC
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When 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.
Which of the below changes in demand in the long-run would lead to entry in the perfectly competitive market for wheat?
a. a decrease in the number of buyers
b. a decrease in buyers' expected price of wheat
c. an increase in income (wheat is a normal good)
d. both a) and b) would lead to long-run entry in perfect competition
Chapter 9 Solutions
EBK MANAGERIAL ECONOMICS
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- Suppose the equilibrium price of a good in a perfectly competitive market is $15. A firm in the market decides to charge $20 for the good. Which of the following will happen? a. The firm's profit will increase. b. The firm will capture the entire market. c. The firm will not be able to sell any output. d. The firm's revenue will increase.arrow_forwardIn a perfectly competitive market Select one: a. each firm takes the good's price as given to it by the market. b. each firm sets its own price so that it is different from its competitors. c. an economic profit is certain. d. consumers are persuaded by advertising.arrow_forwardColumbia’s coffee producers operate in a perfectly competitive industry. The market price for a pound of coffee is determined by? A.the Columbian government. B.the intersection of world supply and world demand for coffee. C.the international coffee federation. D.Columbian coffee farmers.arrow_forward
- a 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_forwardQuestion 28 When economic profit is positive in a perfectly competitive industry, market a. supply will increase in the long run causing firm marginal revenue to rise. b. supply will increase in the long run causing firm marginal revenue to fall. c. supply will decrease in the long run causing firm marginal revenue to fall. d. demand will increase in the long run causing firm marginal revenue to rise. e. supply will decrease in the long run causing firm marginal revenue to rise.arrow_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
- A perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases: A. in the long and short runs, prices and profits will be lower relative to what they were before the demand increase. B. in the short run, prices and profits will be higher, but in the long run, price will fall back to its original level and firms will again earn zero economic profit. C. in the short run, prices and profits will fall, but in the long run, price will rise back to its initial level, as will profits. D. in the long and short runs, prices and profits will be higher relative to what they were before the demand increase.arrow_forward#10. The market for watches is perfectly competitive and is currently in equilibrium. What will happen if watches become more popular among college students? a. In the short run, firms will experience economic profits, but in the long run, firms will leave the market, bringing economic profits back down to zero. b. In the short run, firms will experience economic profits, but in the long run, firms will enter the market, bringing economic profits back down to zero. c. In the short run, firms will incur economic losses, but in the long run, firms will leave the market, bringing economic profits back down to zero. d. In the short run, firms will incur economic losses, but in the long run, firms will enter the market, bringing economic profits back down to zero. e. In both the short run and the long run, firms will experience zero economic profits.arrow_forwardQ. Suppose the book-printing industry is competitive and begins in long-run equilibrium. a. Draw a diagram describing the typical firm in the industry. b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What happens to Hi-Tech’s profits and the price of books in the short run when Hi-Tech’s patent prevents other firms from using new technology? c. What happens in the long run when the patent expires and other firms are free to use the technology?arrow_forward
- In a kinked demand market, whenever one firm decides to lower its price, A. other firms will automatically follow. B. none of the other firms will follow. C. one half of the firms follow, and one half of the firms don't follow the price cut. D. other firms all decide to exit the industry E. all the other firms raise their prices.arrow_forwardPlease answer all 1. Coldwater Bicycle Company operates its factories at capacity and holds a dominant market position in its home country. When it receives a premium priced order from a new customer in another country, it must decide whether to fill that order or continue to supply the full demand in its home market. When it decided not to completely fill the new order, it incurred Group of answer choices a. Sunk costs b. Average costs c. Opportunity costs d. Marginal costs 2. What might happen if a car dealership is awarded a bonus by the manufacturer for selling a certain number of its cars monthly, but the dealership is just short of that quota near the end of the month? Group of answer choices a. Potential buyers will lose buying power at the dealer b. It may sell the remaining cars at huge discounts to hit the quota c. It creates an incentive to sell cars from different manufacturers d. It would ruin the relationship between dealer and manufacturer…arrow_forwardWhich of the following indicates an extremely profitable market in the short-run? a. Many more firms leave the market than join it. b. A great many firms rush to join the market. c. The number of firms in the market remains stable. d. A few more firms join market than leave it. How can a firm avoid fixed costs in the long run? a. by incorporating b. by exiting c. by shutting down d. by expandingarrow_forward
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