In a two-panel diagram, graphically illustrate a perfect competitive market and firm showing the firm earning economic profit in the short run. Use AR, MR, MC, and ATC to identify the profit-maximizing output, as well as the amount of profit earned. b. Illustrate and explain how this market and firm move to the long-run
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a. In a two-panel diagram, graphically illustrate a
b. Illustrate and explain how this market and firm move to the long-run
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- Use a graph to demonstrate the scenario where a competitive firm would be earning positive profit in the short run. Can this scenario be maintained in the long run? Why? What are the ‘shutdown point’ and ‘break even point’ of a competitive firm . Explain with diagram. A competitive market starts in a situation of long run equilibrium. Then there is an increase in demand. Explain what happens in the short run and long run, using necessary diagrams.Imagine you own a company STR LLC. You produce homogenous and easily available goods. Explain the type of market you are operating in. Elaborate your pricing strategy where you can earn normal profits. You have to show production costs and revenue in a table at what production levels you manage to earn profits or otherwise make losses. References: • Makowski, L., & Ostroy, J. M. (2001). Perfect Competition and the Creativity of the Market. Journal of economic literature, 39(2), 479-535. Kaldor, N. (1935). Market imperfection and excess capacity. Economica, 2(5), 33-50.Show graphically and explain what happens in competitive firm and in market in short and long run if: (a) Consumers' income increases.(b) Consumers' income decreases.
- Assume the market for coffee mugs is perfectly competitive. Firms in the market are producing output, but are currently making economic losses. a. How does the price of coffee mugs compare to the average total cost, the average variable cost, and the marginal cost of producing coffee mugs? b. Draw two graphs, side by side, illustrating the present situation for the typical firm and in the market.Instructions: For profit/loss, round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign () in front of those numbers. A loss should be entered as a negative number. Check my work b. Given a price of $8 per gift box, how many boxes of chocolate should Choco Lovers produce? gift boxes What will the profit or loss be per gift box? 24 per gift box C. Suppose that Choco Lovers raises the price to $10 per gift box. Now how many boxes should Choco Lovers produce? gift boxes What will the new profit or loss be per gift box?explain how the costs of the firm are calculated, and the way that prices are determined in perfect competition
- Can you create a graph showing perfect competition for grocery stores in a rural area ? And explain the graph?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.Perfect/Pure Competition On the next few slides be sure to answer the following questions. What is perfect competition? Give an example of perfect competition. How many sellers are competing? What are the barriers to entry? Do the sellers have control over their price? Why or why not? Are the products different? How do people decide what to purchase in a perfectly competitive market?
- How a firm respond to economy profits and economy losses in perfectly competitive market?Answer the following question based on the graph below, which is for Blue Smooth Yoga Mats Ltd. one of 50 small firms operating in the industry. a. What is the profit-maximizing output? Output: b. What price will the firm charge? Price: $ c. How much excess capacity exists at the output in (a)? Excess capacity: d. Is Blue Smooth making economic profits? e. Is the current situation long-run equilibrium?What are the three short-run outcomes in the perfect competition? When a firmtakes the shut-down decision?