Use the graph below to answer the following question: MC ATC Mdles APC Cope Cs Asigents 71 los CI Daty If the market price is P3, in the short run, the perfectly competitive firm will earn O positive economic profit. O negative economic profit but continue producing output. O negative economic profit and shut down. O zero economic proft an 13

Use the graph below to answer the following question: MC ATC Mdles APC Cope Cs Asigents 71 los CI Daty If the market price is P3, in the short run, the perfectly competitive firm will earn O positive economic profit. O negative economic profit but continue producing output. O negative economic profit and shut down. O zero economic proft an 13

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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Similar questions

If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.
What two lines on a cost curve diagram intersect at the zero-profit point?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
Why will profits for films in a perfectly competitive industry tend to vanish in the long run?
What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
A strawberry farmer, operating ih a perfectly competitive market, is currently producing 99 packs of strawberries. The market price for a pack of strawberries is $6 a pack. The marginal cost of producing one more pack for the farmer is $5. What is the marginal revenue the farmer will receive from producing his 100th pack of strawberries? (Hint: If you aren't sure what marginal revenue means, look it up before choosing an answer) O $0.06 O $6 O $1 O $100
In a perfectly competitive market, when are economic profits possible? O Long-run O Economic profits are always zero, firms earn normal profit O Any time, it depends on the indivual firm O Short run