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- Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60er 11 i Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice OO O the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged. 23 11,229 X OCT all Z A
- Graph below represents the cost structure of an individual firm in a perfectly competitive market. ATC MC 50 40 e AVC 30 20 10 8 10 11 12 Quantity (per day) a. Write down the break-even and the shut-down points (both corresponding quantities and prices) for this firm on the table below. quantity (q) Price (P) Break-even Point Shut-down Point b. 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 If the price decreases to $25. C. i. 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 ii. 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?…Assume a purely competitive increasing cost industry is intislly long eun equilibrium producing 10 million units atca market price of $5.00. Supoose that increaae in consumer demand occurs. After all economic adjustments have been completed which output and price combination is most likely to occur ? 9.5 units at a price of $4.50 11 units at a price of $4.75 9 units at a price of $5.25 12 units at a price of $5.50Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Draw2graphs, oneto represent the market (supply and demand), and one to represent asingle firm (demand, marginal cost, and average cost curves). Assume a u-shaped average cost Show the equilibrium price and the quantity produced by the market (Q) and by each individual firm (q).
- E E on The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Assume that MQ Motors currently chooses to operate at Point E. Which statement correctly describes the market of MQ2020? 10,000 Price, marginal cost (5) Pt-$5,440 Po B 0 190 20 Q=32 D Qo Quantity of cars, Q Marginal cost Isoprofit curve $150,000 Isoprofit curve 563,360 Demand curve 120 Select one: O a. Total surplus is not being maximised. Ob. Deadweight loss is the loss incurred by MQ Motors for not selling more cars. O All possible gains from trade are being achieved as MQ Motors operates at its profit-maximising output and price. Od. The amount of consumer surplus is the area ADP. O e. Pareto efficient allocation is currently being achieved.When is an industry productively efficient? R OOD F4 A. When firms in that industry produce the amount of output that intersects with the minimum of their ATC curves ubmission B. When the short-run equilibrium market price is above the long-run equilibrium market price ← PREVIOUS or dº APR 20 % 5 C. When the market price for the good or service in that industry is the same as marginal revenue D. When the average total cost curve intersects the marginal revenue curve at its lowest point T F5 6 MacBook Air F6 Y & 7 F7 U stv * CO 8 A DII F8 - ( 9 DD F9 O 0 VIEW F10 PAn industry currently has 100 firms, each of whichhas fixed cost of $16 and average variable cost asfollows:Quantity Average Variable Cost1 $12 23 34 45 56 6a. Compute a firm’s marginal cost and average totalcost for each quantity from 1 to 6.b. The equilibrium price is currently $10. How muchdoes each firm produce? What is the total quantitysupplied in the market?c. In the long run, firms can enter and exit themarket, and all entrants have the same costs asabove. As this market makes the transition to itslong-run equilibrium, will the price rise or fall?Will the quantity demanded rise or fall? Will thequantity supplied by each firm rise or fall? Explainyour answers.d. Graph the long-run supply curve for this market,with specific numbers on the axes as relevant.
- Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True FalseA market is in long-run equilibrium and firms inthis market have identical cost structures. Supposedemand in this market decreases. Describe whathappens to the market quantity as the market leavesand then returns to long-run equilibriumA market is in long-run equilibrium and firms inthis market have identical cost structures. Supposedemand in this market decreases. Describe whathappens to the profit-maximizing output quantityfor individual firms as the market leaves and thenreturns to long-run equilibrium.