If the market price of a product is $10 that lie between the minimum average variable cost $8 (AVC) and minimum average total cost $15 (ATC) of a firm, that firm will:___________ a) always shut down. b) always continue to produce. c) produce in the short run but shut down in the long run. d) produce in the long run but shut down in the short run. e) make positive economic profits.
Q: or a perfectly competitive firm in the long run, price is Greater than long-run marginal revenue…
A: In a perfectly competitive market, price is determined by the market forces.
Q: In the short run, a strawberry farm operating in a perfectly competitive market would produce…
A: There are different constraints for a perfectly competitive firm in the short-run and in the…
Q: Trout farming is a perfectly competitive industry and all trout farms have the same cost curves.…
A: The answer is as follows:-
Q: A firm in a competitive market has the following cost structure as in the Figure 2 below. If the…
A: Fixed Cost = $3 Market Price = $10 Profit maximizing quantities can be found where, Total Revenue =…
Q: In an increasing cost industry, the long-run market supply curve is _____ because the long run…
A: The expenses that are being incurred by the business for carrying out transactions are known as…
Q: perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates…
A: Given, Price = $110 TC = 70 + 14Q + 2Q2 MC = 14 + 4Q
Q: Which of the following statement(s) describe sunk cost? 1) All of the answers are correct 2) It…
A: To produce a good, two types of cost are incurred, variable cost and fixed or sunk cost.
Q: A firm in a competitive market has the following cost structure: Output Total Cost 0 $5 1 $10…
A: Below is the complete table: Formula used: TR = P × QMR = TRn-TRn-1MC = TCn-TCn-1 Profit = TR - TC
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Quantity produced Total cost($) Average total cost($) Marginal cost($) 0 20 0 0 10 27 2.7 0.7…
Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…
A: Perfect competition refers to the market scenario in which there large number of buyers and sellers…
Q: Firms in the market for soccer balls are selling in a purely competitive market. A firm in the…
A: Answer: A firm in a perfectly competitive market maximizes its profit where the marginal revenue…
Q: In the short run, a perfectly competitive girl will maximize profits ( minimize losses) by producing…
A: Perfect competition is characterized by many sellers and many buyers having perfect information and…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Given: To Find: The Market Price:
Q: A perfectly competitive fırm produces at an output level where marginal revenue is equal to marginal…
A: In a perfectly competitive market, Price is constant so it is equal to marginal revenue. At profit…
Q: part 1. Leave 'r' and 'w' as constants. Solve the cost minimization problem to find L*(q) and K*(q).
A: "Since you have asked multiple parts, we will answer only the first part for you. If you have any…
Q: In the short run, a perfectly competitive firm Question 15 options: chooses its optimal plant…
A: In perfect competition there are many firms producing identical goods.
Q: A firm will shut down in the short-run whenever* price is less than ATC. price is less than AFC.…
A: A short run is a time period in which at least one factor of production is fixed and the rest can be…
Q: Tulip growing is a perfectly competitive industry and all growers have the same costs. The market…
A: A perfect competition market, also called an atomistic market, is referred by various idealizing…
Q: A perfectly competitive firm has a long-run cost function, C(q) = 8q2 + 72. In the long run, this…
A: In case of Perfect Competition, there are large number of buyers and sellers. All firms sell…
Q: For the following, decide whether you agree or dis-agree and explain your answer: a. A firm earning…
A: A perfect competition is the form of market that consist of large number of buyers and sellers,…
Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…
A: Answer: Note: since the options for the blanks are not given my answer may differ. (1). Which of the…
Q: The short-run marginal and average cost curves for a firm are displayed below. When q= 2 and q= 6,…
A:
Q: Which of the following will cause the purely competitive firm to stop operations? A. the price can…
A: The total cost incurred by firms operating in a market includes fixed costs and variable costs.…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: The above given is a case of a firm under perfect competition. The equilibrium condition is P= AR=…
Q: Given the following short run production cost schedule: Short Run Total Cost Function…
A: Since, you have posted multiple subpart questions, as per the guidelines we will answer first…
Q: A perfectly competitive firm has the following total cost function:…
A: Perfect competition is a form of market in which a large number of perfectly informed buyers and…
Q: A firm has the demand and total cost schedules given in the following table. If it wants to maximize…
A: Given Total revenue = price × quantity Profit = Total revenue - Total cost Quantity Price Total…
Q: Price Quantity Total Cost Fixed Cost Variable Cost $10 2000 $24,000 $8000 $16,000 (a) Should this…
A: Here, price, quantity, and different cost information of a firm is given to analyze the short-run…
Q: the short-run supply curve of a perfect competitive firm is the same as that portion of the marginal…
A: Perfect competition: It refers to the firms that produces homogeneous goods and services in the…
Q: A perfectly competitive firm has the following total cost function: Total output Total Cost 0…
A: The perfectly competitive is the type of market structure where there are large number of buyers and…
Q: If the price for a firm's output is greater than the minimum value of its average variable cost, but…
A: The average variable is the amount of variable cost incurred on developing a typical unit of…
Q: the short run, a firm that finds itself earning a loss should compare the market price to which cost…
A: Fixed cost is independent of output produced whereas variable cost varies with the level of…
Q: A firm in a competitive market has a short run cost curve given by C = Q' - 100 + 100Q + 100. (a) If…
A: ANSWER A perfectly competitive firm's short vun shut-down point is when p equals AVCmin If P…
Q: Consider a perfectly competitive market for a product Y and assume that the market is at the long…
A: At equilibrium in the perfectly competitive market, the firm produces at the point where P = ATC in…
Q: For a perfectly competitive firm operating in the short run, in order to maximize profits it should…
A: In a perfectly competitive market, price is constant so it is equal to marginal revenue. Firms are…
Q: Suppose you are operating a firm with a given fixed cost and product market price. If the market for…
A: Perfect competition is a form of market where there are large number of buyers and sellers selling…
Q: A competitive firm’s short-run supply curve is its_________ cost curve above its _________…
A: The market is the collection of buyers and sellers. It is the system in which buyers and sellers…
Q: If the price is less than the average total cost but higher than the average variable cost, then the…
A: In a competitive market, the firm maximize its profit when the market price of the firm is equal to…
Q: Use this table to answer the following question. Output Total Variable Cost $1 $20 $2 $24 $3…
A: The total cost is the total expenditure done by producer in the production process. There are two…
Q: A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has…
A: The quantity, q = 100 The average revenue is given as = $10 The formula for total revenue is as…
Q: Suppose a firm in a perfectly competitive industry is currently producing output at its…
A: A perfectly competitive firm is a price taker, which means it takes the price set by the market…
Q: A perfectly competitive firm will be operating at its shutdown point if it operates at the minimum…
A: A perfectly competitive market is that form of the market with a large number of buyers and sellers.…
Q: Under conditions of perfect or pure competition, or close to those conditions, producers (firms) are…
A: Answer: Correct option: option (2) Explanation: In the case of perfect competition, price is always…
Q: Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His…
A: A competitive firm is one of many firms producing identical goods.
Q: Poinsettia growing is a perfectly competitive industry and all growers have the same costs. The…
A: A perfect competition market, also called an atomistic market, is referred by various idealizing…
Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…
A: The perfectly competitive market is a market type which is characterized by a large number of buyers…
Q: Firms in the market for dog food are selling in a purely competitive market. A firm producing dog…
A: A competitive market is one in which numerous producers compete for the goods and services that we,…
If the market
a) always shut down.
b) always continue to produce.
c) produce in the short run but shut down in the long run.
d) produce in the long run but shut down in the short run.
e) make positive economic profits.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below. a.What is the level of profit for this firm at the profit maximizing output? b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find? c. What do you predict will happen in this market over the long run?c) A certain brand of vacuum cleaners can be purchased from several local stores as well as from several websites. If all sellers charge the same price for the vacuum cleaner, will they all earn zero economic profit in the long run? If all sellers charge the same price and one local seller owns the building in which he does business, paying no rent, is this seller earning a positive economic profit?(a) Let the industry producing soybeans be in a long-run equilibrium. What is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel of soybeans? (b) Suppose that the demand for soybeans drops due to decreased im- port by China and becomes Q = 15.3 − p. In a new long run equilibrium, what is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel? (c) Calculate the change in the producers’ surplus between the situations described in (a) and (b). (d) Show that the decrease in the producers’ surplus equals to the decrease in the total shipping fees as the industry contracts incrementally from the equilibrium output in (a) to the equilibrium output in (b).
- Juan makes dining room chairs in a perfectly competitive industry. He is looking for economic advice and tells you the following data about his business. (Assume cost curves have their standard shapes.) Total revenue is $120,000, Total fixed costs are $100,000 Total variable costs are $110,000 Marginal cost is $200/unit Quantity produced is 600 units What will you suggest to Juan? A: Shut down immediately B: Do not shut down and increase production C: Do not shut down but decrease production D: Do not shut down and do not change the current production level.a) A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run? b) Suppose instead that this business has a fixed cost of $6,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run?A firm sells 1,000 units per week. Suppose the average variable cost is $15, and the average cost is $55. In the short run, the break-even price is:___?_____. . In the long run, the break-even price is . Suppose the firm charges a price of $5 per unit. Use the following table to indicate whether the firm will shut down or continue to produce in the short run and the long run. Time Continue to Produce Shut Down Short Run ? ? Long Run ? ?
- The wheat industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure attached; the long-run cost curves of a wheat farmer are shown in the right-hand panel. Currently, the market price for wheat is $2 per pound, and at that price, consumers are purchasing 800,000 pounds of wheat per day. Using the graphs attached, answer the following: a. How many pounds of wheat will each farmer produce if they want to maximize profits? b. How many farmers are currently serving the industry (fractional numbers are fine)? c. In the long run, what will the equilibrium price of wheat be? Briefly explain your answer.A firm produces a product in a perfectly competitive industry and has a total cost function TC= 50+4q+2q². a. At the short-run market price of $20, the firm is producing 5 units of output. Is the firm maximizing its profit? Explain. b. What quantity of output will the firm produce in the long run, assuming there is no change in cost structure? What will be the long-run equilibrium price? c. Graphically depict the long-run equilibrium for an individual firm within this market.The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. The price of fertilizer must be equal to average variable cost. The price of fertilizer must be less than marginal cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Price and Costs a. a MC Firm ATC LAVO II Quantity Ⓒ Price 0 a Demand Market Quantity ?
- A profit-maximizing firm is producing where MR = MC and has an average total cost of $4, but it gets a price of $3 for each good it sells.a. What would you advise the firm to do? The firm should shut down in the short run and exit the market in the long run. The firm is producing where MR = MC, so it should produce in both the short run and long run. As long as average variable costs are less than $3, in the short run, the firm should produce. In the long run, it should exit the market. The firm should shut down in the short run. Once the firm recoups its fixed costs, it should produce in the long run. b. What would you advise the firm to do if you knew average variable costs were $3.50? The firm should exit the market in the long run, but it should produce in the short run since it is covering average fixed costs. The firm should shut down in the short run. Once the firm recoups its fixed costs, it should reopen in the long run. The firm…Consider a kettle firm A in a perfectly competitive market. Table 1 shows the quantity produced per hour (Q) and the total cost (TC) in the short run. Quantity 0 12345C70 2 6 8 Total cost 17 30 40 55 75 100 130 165 210 Fixed cost 17 17 17 17 17 17 17 17Farmer Brown grows blueberries. The average total cost, average variable cost, and marginal cost of growing blueberries for an individual farmer are illustrated in the graph to the right. Farmer Brown will incur losses if the market price falls below $ per crate. (Enter a numeric response using an integer.) Furthermore, farmer Brown should shut down in the short run if the market price falls below $ per crate. C Price and cost (dollars per crate) 40- 36- 32- 28- 24- 20- 16- 12- 8- 4 0 MC AT AVI 90 10 20 30 40 50 60 70 80 Quantity of blueberries (crates per week) 1