Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 9, Problem 6WNG
(a)
To determine
Graphical illustration of a
(b)
To determine
Graphical illustration of a perfectly competitive firm that incurs losses but that will continue operating in the short run.
(c)
To determine
Graphical illustration of a perfectly competitive firm that incurs losses but that will shut down in the short run.
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Homework 4B
Draw the MR, MC, AVC, ATC, Demand, supply, MC and MR for the
following situations. For each show (as done in class). For each of these
situations show the total revenue, total cost area, and shade the profit or loss
area, and if the situation is a shut down state why it should shutdown.
a. A perfectly competitive firm showing a profit
b. A perfectly competitive firm showing a loss but not a shut-down
c. A perfectly competitive firm at a break-even point
d. A monopolist showing a profit
e. A monopolist showing a loss but not a shut-down
f. A monopolist at a break-even point
g. Difference between a monopolist and a perfectly competitive firm for
a profit situation on the same graph space.
These diagrams, pertain to a perfectly competitive firm producing output q and the
industry in which it operates. In the long run we should expect:
MC
ATC
AVC
MR P
Ono change in the number of firms in this industry.
firms to leave the industry, market supply to fall, and product price to rise.
firms to leave the industry, market supply to rise, and product price to fall.
firms to enter the industry, market supply to rise, and product price to fall.
Refer to the figure above for the perfectly competitive firm. If the market price is $300, the firm will have:
a. normal profit
b. economic profits
c. economic losses but will continue to operate in the short run d. economic losses and will shut down in the short run
e. none of the above
Chapter 9 Solutions
Microeconomics
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.1 - Prob. 4STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.2 - Prob. 4STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2ST
Ch. 9.3 - Prob. 3STCh. 9.3 - Prob. 4STCh. 9.4 - Prob. 1STCh. 9.4 - Prob. 2STCh. 9 - Prob. 1QPCh. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Many plumbers charge the same price for coming to...Ch. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - According to the accompanying table, what quantity...Ch. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNGCh. 9 - Prob. 8WNGCh. 9 - Prob. 9WNGCh. 9 - Prob. 10WNG
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Similar questions
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- Question 2 Use the following graph: Costs and Revenue $14 00 $12 $11.50 $10 0 100 What will firms do in the long-run in this competitive market? Enter Exit Start-Up Shut-Down 150 200 MC AVC ATC P=MR=AR Quantityarrow_forwardGraph the demand curve for a pure competitive firm, label the graph. What is the relationship between marginal revenue (MR) and the demand curve (is MR greater, equal, or less than the demand curve)?arrow_forwardSuppose a perfectly competitive industry with constant costs is initially in long-run equilibrium. Demand for the product produced in this industry increases due to a change in tastes and preferences. In the LONG run this will result in A. the product selling for a higher price, each firm producing more of the good, and positive economic profits for the firms in the industry. B. the product selling for a higher price; each firm in the industry producing the same level of the good as they did initially, since their capital is fixed; and each firm earning positive economic profit. C. the product selling for a higher price and firms making higher profits initially, but the industry will attract new firms, which will cause the price to fall back to its original level and economic profits to fall back to zero. D. the price staying constant, since the firms in this industry are price takers, and the output of each firm increasing; therefore each firm will earn positive economic profit.arrow_forward
- The packaged milk market in Pakistan is perfectly competitive. (1) Some firms in the market are making profit, others are having losses. Draw and explain graphs showing MC, ATC, MR, AR, price and quantity of output to illustrate these situations. (2) In the short run some of these firms may decide to shut down temporarily. In the long run some of these firms may exit the market, and new firms may enter. Draw and explain graphs to show these situations and short run and long run supply curves. (3) If firms can enter and exit the packaged milk market in the long run but not in the short run, show how a decrease in demand due to lower incomes of Pakistani consumers during COVID Pandemic affects price and profitability.arrow_forwardDiscuss the long-term effects in a perfectly competitive market if an existing firm is making profits or losses. Use graphs to explain your explanations.arrow_forwardO Macmillan Learning Perfect Competition: Around the World Consider the accompanying graph illustrating the marginal cost (MC), average total cost (ATC), and demand (D) curves for an individual coffee farmer in Colombia. Determine what profits, if any, the farmer is earning. Then graphically illustrate the long-run equilibrium for the farmer. a. In the short run, the farmer is earning b. Now assume the Colombian farmer continues to operate in the long run. Move the appropriate curve or curves on the graph to illustrate the long-run equilibrium for the farmer. c. In the long run, the farmer is earning a normal profit an economic loss an economic profit Price Firm Firm's output MC ATC D = Pricearrow_forward
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