EBK MANAGERIAL ECONOMICS
4th Edition
ISBN: 9780100546622
Author: FROEB
Publisher: YUZU
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Chapter 9, Problem 6MC
To determine
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Students have asked these similar questions
In a market this is highly competitive with little product differentiation and easy market entry, prices tend to be
Group of answer choices
a. Marginal
b. Elastic
c. Inelastic
d. Static
b. In general, an individual firm in a perfectly competitive market faces a perfectly elastic demand curve.
False
True
For a perfectly competitive firm,
a. demand is perfectly elastic.
b. producers must lower the price of its product in order to sell additional units of the product.
c. price equals marginal revenue only for the first unit of the good produced and sold.
d. demand is perfectly inelastic.
Chapter 9 Solutions
EBK MANAGERIAL ECONOMICS
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- Co Assignment Content 1) When the Price is $4 the quantity supplied of hats is 100. If the price changes to $6 dollars and the quantity supplied changes to 400, is the elasticity of supply elastic, inelastic or unit elastic? How did you reach that conclusion? 2) Why will economic profits for firms in a perfectly competitive industry tend to vanish in the long run? What about accounting AS 12arrow_forwardAre market supply curves typically more elastic in the short run or in the long run? Explain.arrow_forwardConsider a firm in a perfectly competitive market. If this firm were to raise its price, its a. revenue would fall dramatically b. profits would increase as long as costs remained constant C. total costs would increase revenue would increase only if market demand were inelastic e. revenue would decrease only if market demand were elasticarrow_forward
- In a competitive market, are market supply curves typically more elastic in the short run or in the long run? Explain within 40 words.arrow_forward35. You are operating in a perfect market are you are price taker? Why? Explain.arrow_forwardA firm facing a perfectly price elastic demand curve, ceteris paribusA. can sell all it produces only by lowering its price below the market price.B. can raise its price and not lose all its customers.C. will sell the same amount regardless if it raises or lowers the price it charges.D. will have zero quantity demanded if it raises its price above the market pricearrow_forward
- explain your answers in detail and use graphs whenever appropriate: The market for rental cars is very competitive. How would the following developments affect the quantity of car rentals that a typical rental car company wants to supply in the short run? a. With the easing of fears about Covid 19, people are more excited to travel than before. b. Local governments reduce the yearly fee that rental car companies have to pay for their facilities. Note, these fees do not vary with how many cars the company rents. c. Rental car companies have to pay higher wages for their workers. Suppose that initially the market for rental cars is in long-run equilibrium. a. What does the fall in the yearly fee rental car companies have to pay for their facilities do to the profits of a typical rental car company in the short run? b. What will happen to the equilibrium price and quantity of rental cars in the long run? Why? What will happen to the profits of a typical rental car company in the long run?arrow_forwardYou are operating in a perfect market are you are price taker? Why?arrow_forwardQ1 The price elasticity of demand facing a perfectly competitive firm is... a. Perfectly elastic. b. Elastic. c. Perfectly inelastic. d. Inelastic. e. Unit.arrow_forward
- What is a price taker? A price taker is A. a firm with a perfectly inelastic demand curve. B. a firm that has the ability to charge a price greater than marginal cost. C. a firm that is unable to affect the market price. D. a firm that does not seek to maximize profits. E. a firm with a downward-sloping demand curve. When are firms likely to be price takers? A firm is likely to be a price taker when A. it has market power. B. firms in the industry collude. C. it sells a differentiated product. D. it represents a small fraction of the total market. E. barriers to entry are substantial.arrow_forwardATC MC 50 40 AVC 30 20 8 10 11 12 Quantity (per day) a. If the price in this market is $50, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output. Show your calculations b. If the price decreases to $25. c) Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Explain your answer. d) Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium? Explain your answer. Price and costs (dollars)arrow_forwardYou're a milk company in a highly competitive market. The market price of hay and alfalfa, your cows' favorite food, has recently dropped. Which of the following is likely true? A.The price elasticity of demand for your milk decreases B. You can charge a higher price for milk C. Your company's demand curve has fallen D. Your shut down point becomes largerarrow_forward
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