Consider a perfectly competitive market where all firms produce using the same technology. The long-run supply curve is (Need help? Read chapter 4.7 of the textbook, here: https://playconomics.com/textbooks/view/playconomics4-2019t3/part2/ch4/s7) None of these. perfectly Inelastic (i.e., a vertical line). upward sloping. perfectly Elastic (i.e., a horizontal line). downward sloping.

Consider a perfectly competitive market where all firms produce using the same technology. The long-run supply curve is (Need help? Read chapter 4.7 of the textbook, here: https://playconomics.com/textbooks/view/playconomics4-2019t3/part2/ch4/s7) None of these. perfectly Inelastic (i.e., a vertical line). upward sloping. perfectly Elastic (i.e., a horizontal line). downward sloping.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 1MC

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Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), plot the industry supply curves: one for the short run and one for the long run. Short‑run quantity supplied Price Will Jill Phil $2.00 4 2 0 $4.00 6 4 2 $6.00 9 5 4 $8.00 12 8 6 Firm Will Jill Phil Minimum ATC $2.50 $5.00 $7.00 Minimum AVC $1.00 $2.00 $2.50 Minimum MC $0.50 $1.00 $2.00
Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), plot the industry supply curves: one for the short run and one for the long run.
Perfect competition is an extremely rare type of market in the real world. This is because the conditions necessary for perfect competition are difficult to meet. Write about an example of perfect competition (or at least a market that is very close to perfect competition). Do different sellers in the market you’ve described charge different prices for their product? Does your answer support the idea that this market is perfectly competitive? Explain. Does it seem as if the example you mentioned is allocatively efficient? In other words, does the market produce enough of this good (or does it produce too much or too little)? Explain.
The graph shows the demand (D), marginal cost (MC), marginal revenue (MR), and average variable cost (AVC) curves for a firm that is a price maker for its product. The MC and AVC curves slope upward because of limited space and resources for production activity: To increase output, the firm must bring older, less-reliable equipment out of storage, pay its workers extra for overtime hours, and so on. If the firm is able to practice price discrimination, using the two prices indicated by the two points indicated on the demand curve, use the area tool to outline the region that represents the net revenue (revenue minus production costs, but ignoring fixed costs). The lower boundary of the region should be slanted. To refer to the graphing tutorial for this question type, please click here. Price MR MG D Quantity
The graph shows the demand (D), marginal cost (MC), marginal revenue (MR), and average variable cost (AVC) curves for a firm that is a price maker for its product. The MC and AVC curves slope upward because of limited space and resources for production activity: To increase output, the firm must bring older, less-reliable equipment out of storage, pay its workers extra for overtime hours, and so on. If the firm is able to practice price discrimination, using the two prices indicated by the two points indicated on the demand curve, use the area tool to outline the region that represents the net revenue (revenue minus production costs, but ignoring fixed costs). The lower boundary of the region should be slanted. To refer to the graphing tutorial for this question type, please click here. Price MR MC AVC D Quantity
Consider the competitive market for dress shirts. 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. For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price.
PQ4.2 Case: A firm is operating in a competitive market. Your Cost of Production is given by C = 200 + 2q², where the Level of Output is (q) and the Total Cost is (C). The Marginal Cost of Production (MC) is 4q; the Fixed Cost (FC) is $200. Given: C=200+2q² q=Level of Output C = Total Cost MC = 4q| FC = $200 Questions: (i) If the price of watches is $100, how many watches should you produce to Maximize Profit? (ii) What will the Profit Level be? (iii) At what Minimum Price will the firm produce a Positive Output?
The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer? Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market. (use MC, ACT, and AVC) Assuming there is no change in either demand or the firms’ cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market.
Describe how firms in Perfect Competition achieve both allocative and productive efficiency and their significance in relation to the other market models. Why is the portion of the marginal cost curve above the minimum average variable cost the short run supply curve in Perfect Competition?
Examine the graph below that presents costs for a typical olive oil producer and answer questions: a) What is the ATC, AVC and AFC at q = 12? (approximate to one decimal) ATC = AVC = AFC = What is TC, VC and FC at q = 12? Show your calculations. b) If the price of olive oil is $3.50, how much oil would a price - taking firm be willing to produce and sell? Would the firm be able to make a profit at this price? If not, would there be a loss? Calculate & indicate profit/loss box on the graph above. c) According to the graph, what is the break- even price/cost of a pound of olive oil? d) If the olive oil prices rise to $6 per kilogram, would the firm make a profit? How much it would be willing to sell at this price? ง 5) Examine the graph below that presents casts for a typical olive oil producer and answer questions: a) What is the ATC, AVC and AFC at q-12? (approximate to one decimal) ATC= AVC- What is TC, VC and FC at q-12? Show your calculations. AFC= MC ATC AVE Quantity 18 b) If the…
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per instant pot) (Instant pots) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per instant pot) (Instant pots) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed…