Q18 solution neededQuestion 18If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ?Group of answer choicesRaise it's pricesExit the marketLower it's quantity producedLower it's prices to try to sell more Question 17Refer to Figure 5-1.At which price range will the firm continue to operate in the short run but earn negative profits?any price higher than P4any price higher than P3 but less than P4anyprice higher than P2 but less than P3any price lower than P1 Suppose a firm operating in a perfectly competitive market has the following cost curves:Figure 5-1MCATCP4P3P2PlPriceQ1Q2 03 04Q52AVCQuantity

18. Here, it is given that a perfectly competitive firm is operating at a level where it incurs…

If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ? Group of answer choices Raise it's prices Exit the market Lower it's quantity produced Lower it's prices to try to sell more

If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ? Group of answer choices Raise it's prices Exit the market Lower it's quantity produced Lower it's prices to try to sell more

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section9.1: The Theory Of Perfect Competition

Problem 4ST

See similar textbooks

Related questions

Q: A depository institution holds $131 million in required reserves and $9 million in excess reserves.…

A: We have Required reserve RR = $131 million Excess reserve ER= $9 million Loans = $404 million…

Q: There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qA…

A: The Cournot model is the model in which quantity is determined at various prices. It means there are…

Q: question one What strategies and tactics can be employed during negotiation, and when or why will…

A: Features of negotiation: 1. Any negotiation requires the presence of at least two parties. Both…

Q: - A monopolist has variable costs of VC = q² and faces a demand curve of P = 24- q, where P is price…

A: Price discrimination means charging different price of same goods from different consumer. There…

Q: The supply and demand curves for bananas are as follows: QD = 3,750 - 725P QS = 920 +…

A: Price floor or support price is the minimum price which should be paid by the consumers. Support…

Q: The demand and supply functions of a product is given as P = 200- 0.5Q and P = 100+ 0.5Q,…

A: *Hi there as you have posted multiple questions , following our guidelines we can only solve the…

Q: what is the present worth (PW) for the following cash flow?. Use (i-6 Annual payment= $100 per year…

A: Given the number of years = 9 years Interest rate = 6% Annual payment = $100 First year return =…

Q: The information on price and quantity of three products consumed by a typical household in the year…

A: The Consumer Price Index (CPI) is a weighted average of the prices of all goods and services that…

Q: You need to hire some new employees to staff your startup venture. You know that potential employees…

A: The expected value of hiring: Expected value of hiring = 0.1 35000 + 46000 +…

Q: sing the demand and supply curves for bonds, explain the effect of the following on the interest…

A: Demand and Supply (AD) (AS) Aggregate demand in an economy refers to the total demand for the goods…

Q: 9. A machine which costs $100 000 when new has a lifetime of 15 years and a salvage value equal to…

A: Given information: I = Initial investment = $100,0000 S = Salvage Value = $100000 × 20% = $20,000…

Q: (b) There are three people and two goods in an economy. The utility functions and initial bundles…

A: Utility function can be defined as the measure for a group of goods and services preferred by…

Q: please type the answer by computer, so i can see it clearly, thank you!!! Please answer in detail…

A: The Solow–Swan model, sometimes known as the exogenous growth model, is a long-run economic growth…

Q: Question 1 The economy of Fun land is described as C = 0.8Y 1 = 200 Where the goods market…

A: (a) We know that, Y = C + I It has given that, C = 0.8Y I = 200…

Q: True or false? why? 1. Mr. Krabs' restaurant have two inputs: capital and labor. The rent (unit cost…

A: Since you have asked multiple questions we would be answering the first one for you. To get the…

Q: Max Pentridge is thinking of starting a pinball palace near a large Melbourne university. His…

A: The measure that depicts the satisfaction that is being gained by an individual from the consumption…

Q: The graph shows the marginal private benefit from trade school education. The marginal - cost of…

A: Due to positive consumption externality, MSB is more than the MB.

Q: For a perfectly competitive firm, profit maximization happens at: A. P=MC B. AR=MC C. MR = ATC D. MR…

A: A perfectly competitive market is the special type of market where a single firm cannot influence…

Q: two timber companies, Alpha and Beta, have to decide whether to harvest timber from the North Hill…

A: The Nash equilibrium is a dynamic hypothesis inside game hypothesis that expresses a player can…

Q: one: Et and skilled play by all players ility/rationality at every point/path in the regardless of…

A: A subgame perfect equilibrium is a refinement of the Nash harmony used in unique games in game…

Q: Given an interest rate of 12%, how much does one need to invest today to acquire 5,000 pesos…

A: Given information, Interest rate (i): 12% Annual income (A): 5,000 pesos Time period (N): 20 years…

Q: Bruno Corporation is involved in the business of injection molding of plastics. It is considering…

A: IRR stands for Internal Rate of Return which refers that which helps in represent the financial…

Q: Give example of merit

A: Merit pay refers to performance-related pay which provides bonuses or base pay increases for…

Q: Macroeconomics is an aggregate of what happens at the microeconomic level. Would it be possible for…

A: The field of economics that studies the behavior of the economy as a whole is known as…

Q: What does your answer in part e imply about antitrust policy towards mergers of firms selling…

A: When talking about merger at the marketplace, it is the situation when two independent firms decide…

Q: What is the gain or loss on purchasing power for 2021? (if LOSS, put a negative (-) sign before the…

A: Answer- Consumer Price Index :- It is the a measure which help calculate the change in price level…

Q: armer Sam is supplying corns in a perfectly competitive market. In Year 1 he sells 3000 tons of…

A: revenue is the monetary value received from selling the products with respective price level .…

Q: onsider a firm that sells its output in a perfectly competitive product market and hires labour in a…

A: Given the value: The marginal product of labour, VMPE= 20 - 5E Identical firms = 50 Supply function,…

Q: Suppose all banks have zero excess reserves. The Fed buys bonds for $1 million and a bond dealer…

A: Here, it is given that the amount of $1 million is deposited in a bank that the bank loans out its…

Q: Which of these is a weakness of the Paris Accord O No binding emissions reduction targets were…

A: The Paris Climate Agreement fills a stunningly fundamental need: requesting that nations moderate…

Q: Olivia’s asset is purchased for Php 25,000. Its estimated life is 12 years after which it will be…

A: Depreciation refers to the decrease in the value of asset overtime due to tear and wear of asset. In…

Q: Aggregate labour hours, L, are given by L = 51*(1-t), where 't' is the rate of income tax. The real…

A: In this situation:- Aggregate labour hours=L=51*(1-t) where, t is the rate of income tax Also, the…

Q: Which of these is an example of a macroeconomic topic? Please choose the correct answer from the…

A: Microeconomics studies the behavior of individual economic units of the economy, i.e., individual…

Q: Using the cash flow shown below decide which alternative is the most economical using (a) Annual…

A: To find the annual worth and present worth of the alternatives we firstly derive present worth using…

Q: If the oligopoly members agree on a total quantity to produce, what quantity would they choose? Why?

A: Oligopoly is the market shared by a small number of producers and sellers.

Q: Use the IS-LM model to illustrate graphically the final impact of the reduction in government…

A: Goods market equilibrium is shown by IS curve where LM curve shows money market equilibrium . When…

Q: Consider the perfectly competitive spice market. At the equilibrium price, the elasticity of market…

A: Percentage change is used in finance for various purposes, including indicating the percentage…

Q: Question 2 This diagram shows the market for cocoa. Equilibrium is currently at point x The market…

A: Speculation of future prices is one of the factors that can cause changes in the current demand for…

Q: Question 6 Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the…

A: A competitive firm is one that operates its business in market with high competition as all the…

Q: B. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L². Its…

Q: Which one of the following is a fixed cost for a handmade furniture manufacturer? The cost of…

A: Since ,the fixed cost are the cost which doesn't used to vary with the change in output. In the…

Q: If the CPI in 2015 was 114.7 and the CPI in 2016 was 124.5, then the rate of inflation between 2015…

A: Step 1 A consumer price index is a cost list, the cost of a weighted typical market crate of buyer…

Q: In competitive markets, 3 .Group of answer choices 1. market forces of demand and supply determine…

A: A perfectly competitive firm is a price taker, which means the price is set by the market forces,…

Q: Name the largest manufacturing nation in the world.

A: Manufacturing Sector includes transformation of mechanical, chemical, physical products and…

Q: s to clear $40,000 after paying off the remaining mortgage principal (in other words, he will pay…

A: The rate of interest is 6% compounded monthly. Thus, Firstly, compute the effective interest rate.…

Q: Consider the economy of MadibazVille MadibazVille does not trade with the rest of the world. [Note:…

A: In a closed economy:- GDP=Y=C+I+G here Y=3K0.5L0.5 C=150+0.75Y-T I=210-5r G=500 K=1600 L=81 and…

Q: If non-chequable savings accounts are equal to R216 600, M1A equals R560 000, cheques, transmission…

A: The money market deposit account can be calculated by calculating the value of the M2 measure of…

Q: Question 7 Which of the following statements is not true? Economies of scale means lower…

A: Economies of scale can be defined as the cost advantages which are reaped by the companies when…

Q: A perfectly competitive firm charges a price that is O lower; more O lower; less O higher; more O…

A: In perfect competition there are larger number of firms and in monopoly there is a single firm.

Q: Assume that in 2015, the following prevails in the Republic of Nurd: Y = $200 G = $0 C = $160 T = $0…

A: "Since you have posted a question with multiple subparts,we will solve first three subpart for…

Question

Q18 solution needed

Question 18

If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ?

Group of answer choices

Raise it's prices

Exit the market

Lower it's quantity produced

Lower it's prices to try to sell more

Question 17
Refer to Figure 5-1.
At which price range will the firm continue to operate in the short run but earn negative profits?
any price higher than P4
any price higher than P3 but less than P4
any
price higher than P2 but less than P3
any price lower than P1

Suppose a firm operating in a perfectly competitive market has the following cost curves:
Figure 5-1
MC
ATC
P4
P3
P2
Pl
Price
Q1Q2 03 04
Q5
2
AVC
Quantity

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The following diagram shows cost curves for a perfectly competitive firm. SMC 2.60 ATC AVC 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output Price and cost (dollars)
The following cost data is for a firm which is selling in a perfectly competitive market: Average fixed Average variable Average total Total Marginal cost S17 product cost S100.00 50.00 33.33 25.00 20.00 cost $17.00 cost $117.00 66.00 47.33 39.25 34.00 2 16.00 15 3 4 15.00 14.25 14.00 14.00 15.71 17.50 13 12 13 16.67 14.29 12.50 11.11 10.00 9.09 7.33 30.67 30.00 14 26 30 35 7 8. 9. 10 11 30.00 30.55 31.60 33.09 35.00 19.44 21.60 41 24.00 48 12 26.67 56 Refer to the data above. If there were 600 identical firms in this industry and total or market demand is as shown below, equilibrium price will be: Quantity demanded 3,000 6,000 9,000 11,000 14,000 19,500 Price $50 42 36 32 20 13 $36
The figure shows a bakery's marginal and average cost curves, and its isoprofit curves. The bakery is a price-taker in a large bread market. Suppose the current market price is P₁. Based on this information, which of the following statements is correct? Price, Cost €6 (5 20 40 60 80 Quantity MC hoprofits AC 100 120 140 160 180 number of loaves Select one or more: a. The bakery would be better off raising its price up to its AC level. O b. The bakery would be minimising its loss at A. Oc. If the bakery is not yet in the market then it would not enter the market. d. If the bakery is already in the market, then it would always immediately exit the market because it is making a loss.
Bitcom, a manufacturer of electronics, estimates the following relation between marginal cost of production and monthly output: MC= $150+ 0.005Q Compute Bitcom’s short-run supply curve for its product. Show Calculations and can it be done in Excel?
Assume a competitive firm faces a market price of $120, and a cost curve of: C = 0.004q - + 25g + 750. Marginal cost (MC) equals MC =. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) Ass O stv 13 MacBook Air 80 DII esc F9 F3 F4 F5 F6 F7 F1 @ 23 $ % & 1 2 3 7 Q W E R Y tab S F K caps lock C V M shift fn control option command このつつエ T リ

Sketch a marginal cost curve for a firm that has constant marginal costs of production up to its capacity of 500 units but which cannot increase its output beyond that capacity PLEASEE SHOW THE CURVE
The table below shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. Quantity 0 It must fall. 100 200 300 400 500 600 It must rise to offset the increased cost. Total Cost Variable Cost (dollars) (dollars) $1,000 $0 1,360 360 1,560 560 1,960 2,760 4,000 5,800 Suppose the fixed cost of production rises by $500 and the price per unit is still $8. What happens to the firm's profit-maximizing output level? The firm will shut down. O It will remain the same. 960 1,760 3,000 4,800
Conigan Box Company produces cardboard boxes that are sold in bundles of 1000 boxes. The market is highly competitive, with boxes currently selling for $100 per thousand. Conigan's total and marginal cost curves are:TC = 3,000,000 + 0.001Q2MC = 0.002Qwhere Q is measured in thousand box bundles per year. Calculate Conigan's profit maximizing quantity. Is the firm earning a profit?
1) The cost curves for a firm in a perfectly competitive industry are given below. Complete the table. If the firm operates in a perfectly competitive market, and the market price is $25 per unit, what Quantity should this firm produce at? TFC TC TVC AVC ATC MC TR S100 S100 1 S100 S130 2 S100 S150 S100 S160 S100 S172 5 S100 S185 6 S100 $210 S100 $240 S100 $280 S100 $330 10 S100 $390 Table 9.1
True/False A perfectly competitve firm's supply curve is its marginal cost curve above the minimum average variable cost.
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs MC ($) Quantity of Ear Buds 5 10 15 20 25 30 35 40 2.00 2.45 3.55 4.00 5.50 5.98 8.52 pairs ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 Check my work Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the…
Given the cost data in the table below, the firm will shut down and produce zero output if the market price falls below in which case the firm's loss is Average Total Variable Total Cost, Marginal Cost, Average Total Output, Q Variable Cost, Cost, TVCIQ) TC(Q) MC(Q) Cost, ATC(Q) AVCIQ) 80 $9.813.33 $11,813.33 $48.00 $122.67 $147.67 90 $10,260.00 $12,260.00 $42.00 $114.00 $136.22 100 $10,666.67 $12,666.67 $40.00 $106.67 $126.67 110 $11,073.33 $13,073.33 $42.00 $100.67 $118.85 120 $11,520.00 $13,520.00 $48.00 $96.00 $112.67 130 $12,046.67 $14,046.67 $58.00 $92.67 $108.05 140 $12,693.33 $14,693.33 $72.00 $90.67 $104.95 150 $13,500.00 $15,500.00 $90.00 $90.00 $103.33 160 $14,506.67 $16.506.67 $112.00 $90.67 $103.17 170 $15,753.33 $17,753.33 $138.00 $92.67 $104.43 180 $17,280.00 $19,280.00 $168.00 $96.00 $107.11 190 $19,126.67 $21,126.67 $202.00 $100.67 $111.19 200 $21,333.33 $23,333.33 $240.00 $106.67 $116.67 O $40; $12,666.67. O $90; $2,000. O $103.17: $2.000. $90; $0. O $90; $29,000. O…