Which of the following is NOT true about a price taking firm? a.If P* = SAC(q*), then profit = 0 b.π = q*(P* - STC/q*) c.If P* > SAC(q*), then profit < 0 d.π = q*[P* - SAC(q*)]
Q: Why is marginal revenue for a firm in perfect competition equal to the market price?
A: The increase in revenue that comes from selling one more unit of output is known as marginal revenue…
Q: competitive market price is $60, and a competitive firm’s total costs = q^2 - 6q + 990 and marginal…
A: * SOLUTION :-
Q: Good Grapes is selling grapes in a purely competitive market. Its output is 5,000 pounds, which it…
A: The pure competition consists of a large number of buyers and sellers, having homogeneous products…
Q: If the corn industry is perfectly competitive with a market price of $2 per bushel and a corn farmer…
A: A market formed by the agglomeration of a large number of firms identical in size that produce and…
Q: Use the information provided below for Questions 17, 18, and 19. There are 100 perfectly competitive…
A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…
Q: Scenario: You and the other donut shops that just opened in your area are all selling the same basic…
A: The formulae used to solve the table are given below: TC = VC + FC TR = P *Q Pr = TR-TC MC = TRn -…
Q: Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands,…
A: In case of pure competition sellers & buyers are in large numbers & perfectly informed that…
Q: Farmer Brown grows peaches in Georgia. Suppose the market for peaches is perfectly competitive and…
A: Since Brown is a perfect competition, Farmer Brown will charge the price of $22 per box of peaches.…
Q: I have a question regarding a problem; the oilindustry is perfectly competitive 1: for each…
A: The supply curve is an upward-sloping curve. Supply curve shows that, as price increases, the firm…
Q: 70. In a perfectly competitive market, industry demand is given by Q = 1000 – 20P. The typical…
A: In a competitive industry there are large number of firms producing identical products thus each…
Q: Perfectly competitive firms are price takers. (A) What would happen if a perfectly competitive firm…
A: A perfectly competitive market is one where a firm has no incentive to deviate from market value for…
Q: economic profit, a firm at zero economic profits, or a firm operating at a loss.
A: When Price is higher (lower) then ATC, firms make economic profit (loss) and enter (leave) the…
Q: Which of the following is proof that the firm is not perfectly competitive a. Marginal cost is below…
A: In the perfectly competitive market, it can be said that the average revenue, marginal revenue and…
Q: 1. For an individual firm in a perfectly competitive market, the cost function is c(y) = 8y2 + 5y +…
A: a) In a perfectly competitive market, At equilibrium MC = P = AR= MR Cost function (TC) = 8y2 + 5y +…
Q: Using the information in the table above, complete the following supply schedule for a company in…
A: Cost analysis is important concept of microeconomics, and very essential in modern business world
Q: In the short-run model of perfect competition, there is always a range of prices above the shutdown…
A: When talking about a perfectly competitive firm it can be seen that the firm will stay in the market…
Q: 22. At a price of P1, at what output level would a perfectly competitive firm produce? a. Q1 b. Q2…
A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…
Q: Given the operations of a peanut firm under perfect competition and assuming that the price of…
A: The total revenue of a firm is given by, TR = Price x Output
Q: Given the operations of a peanut firm under perfect competition and assuming that the price of…
A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…
Q: Question 13 If a firm operating in a competitive industry shuts down in the short run, it can avoid…
A: The structure of a market where there are numerous firms competing with each other for selling goods…
Q: Each of 1,000 identical firms in the competitive peanut butter industry has a short- run marginal…
A: Equilibrium in the market occurs where demand and supply are equal
Q: Explain why a profit-maximizing competitive firm would produce up to the point where price equals…
A: The marginal cost of creation is the adjustment of absolute creation cost that comes from making or…
Q: Graph the AT C, AV C, MC, and MR curves in a single graph, and indicate the profit maximizing level…
A:
Q: Which of the following offers the best explanation of why “marginal revenue equals marginal cost” is…
A: Marginal revenue is equal to marginal cost is the condition for profit maximizing level output. Firm…
Q: The equilibrium of a competitive industry is: A neither efficient nor equitable B equitable…
A: A competitive industry is one with many sellers and many buyers. In this market, a large group of…
Q: Consider a firm that is indifferent between shutting down and continuing to operate in the short run…
A: Given that, Market price = $50 Total cost = $600 Average fixed cost = $10 We have to find revenue of…
Q: level of output, the
A: A competitive market consists of a large numbers of producers competing with each other for…
Q: Why can't a perfectly competitive firm charge a price premium (sell at a higher price) relative to…
A: A perfectly competitive market is one with a large number of buyers as well as sellers.
Q: What type of industry has the characteristics where there are many producers, they are able to…
A: The industry is said to be Monopolistic Competition. Monopolistic competition is the market…
Q: Quantity Fixed Cost Variable Cost Total Cost Marginal Cost 10 200 50 250 0 20 200 100 300 5 30 200…
A: In perfectly competitive market, price is constant and it is equal to marginal revenue. Marginal…
Q: In the short run, in a perfect competition market structure, if P>ATC which of the following will…
A: In the short run, the interaction between demand and provide determines the “market-clearing" price…
Q: At what point should firms shut down in the short run? a. when marginal revenue equals marginal…
A: (Q) At what point should firms shut down in the short run? a. when marginal revenue equals marginal…
Q: Suppose you are the manager of a watchmaking firm operating in a perfectly competitive market. Your…
A: In perfectly competitive market, price is constant so price is equal to marginal revenue. Firms will…
Q: In a perfectly competitive market with constant cost industry and with the market demand…
A: Let this be the long run TC= 100 + 4q2 Then ATC=TC/q LRATC=100/q+4q Minimizing this :Putting the…
Q: T(q) = R(q) – C(q) = 40q – (35 + 20q + 10q). What is the positive output level that maximizes the…
A: A firm earns maximum profit by producing output at a level where marginal revenue is equal to…
Q: Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the…
A: Firms in perfect competition are price takers and accept the market price as given.
Q: Whether firms are profit maximisers or are pursuing some alternative objective(s), many set prices,…
A: A firm that is a profit maximiser will adjust its mark up more often as compared to a firm that is a…
Q: Use the table below listing Average Total Cost (ATC)d and Marginal Cost (MC) for a firm in perfect…
A: Perfect competition is the market structure where there are large no of buyers and sellers selling…
Q: Should a firm shut down and why if its revenue is R=$ 1, 000. Its variable cost…
A: The profits earned by a firm operating in a competitive market are the difference between the total…
Q: Suppose all firms in a given industry have the same supply curve given by S,(p)p/4. Plot and label…
A: The supply curve of each firm is given to be: Si(p) =p/4 There are 4 firms in the industry, so the…
Q: At the current short-run market price, firms will in the short run. In the long run,
A: please find the answer below.
Q: Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 600 wands,…
A: Given, Output = 600 wands Price = $8 Marginal cost (MC) = $8 Average total cost = $20…
Which of the following is NOT true about a price taking firm?
Step by step
Solved in 2 steps
- Consider the following information: TC = 20 + 5Q + Q2 Q = 25 – P Where TC is total cost, Q is the total product and P is price. What is the correct expression for total profit? a. 20 – 2Q2 – Q b. 20Q – 2Q2 – 20 c. Q + 2Q2 + 20 d. 20Q + 5Q2 +20Consider the following information: TC = 15 + 5Q + Q2 Q = 30 – P Where TC is total cost, Q is the total product and P is price. What is the correct expression for total profit? a.25Q – 2Q2 – 15 b.25Q – 2Q2 – 20 c.25Q – 2Q2 + 15 d.25Q – 2Q2 + 20A firms cost and revenue functions look like this in 3 questions below. Total cost: TC = 100 + 2Q + Q2 Marginal cost: MC = 2 + 2Q Price: P=22 What is the profit maximizing output? a. 8 b. 10 c. 12 d. 25 e. All the other answers are wrong. What is the firm's profit? a. -14 b. -6 c. 0 d. 15 e. All then other answers are wrong. What are the fixed costs and variable costs at the profit maximising output? a. FC=0, VC=220 b. FC=100, VC=80 c. FC=80, VC=244 d. FC=100, VC=120 e. All the other answers are wrong.
- Question #1: Perfect Competition Kevins Kayak Company produces kayaks. Assume that the kayak industry is perfectly competitive. The firm has a total cost function of TC(Q) = 240,10 12875 4 Q+. Kevin can sell all the kayaks he produces for $1,200 each.(a) How many kayaks should Kevin produce (i.e., find Q)? (b) Calculate the ATC if Kevin produced at the output level you found in Part (a)? (b) How much profit would Kevin make at the output level found in Part (a)? (c) Should Kevin stay in business? You must justify your answer using the shut-downrule (relating price and average variable cost)!Consider a competitive firm with total costs given by T C(q) = 100 + 10q + q^2. The firm faces a market price p = 50. (a) Graph the AT C, AV C, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corresponding to profit and label it. (b) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, T R, T C, and π? (c) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?Pindyck & Rubinfeld, 8e. Ch 8 #7. Suppose the same rm's cost function is C(q) = 4q 2 + 16. (From #6, we also know that the market price is $20 and the industry is perfectly competitive.) (a) Find the variable cost, xed cost, average cost, average variable cost, and average xed cost. (b) Show the average cost, marginal cost, and average variable cost curves on a graph. (c) Find the output that minimizes average cost.
- The diagram shows a price-taking bakery's marginal and average cost curves, and its isoprofit curves. The current market price for bread is P*= 2.50. Which of the following statements is correct? 8 Price, P (€); cost 4 3.70 2.50 2 0 0 Select one: 20 40 60 80 100 120 140 Quantity of loaves, Q 160 180 O a. The bakery is a price setter and sets its price as 2.50. b. The bakery maximises its profits by supplying 160 loaves. O c. The bakery's profit is 200. Marginal cost curve Isoprofit curve: €200 Isoprofit curve: €80 Firm's demand curve Zero-economic- profit curve (AC curve) 200 O d. The bakery's profit decreases until the quantity is 120, and then increases. e. The marginal cost curve is the bakery's supply curve.Complete the following table. Note that the firm in question is profit-maximizing in a competitive market. Units of output Average Revenue 90 Average Total Cost $6 $6 Group of answer choices A.) x=$6,y=$3,z=$270 B.) x=$3,y=$6,z=$0 C.) x=$6,y=$3,z=$0 D.) x=$3,y=$6,z=$270 Fixed Marginal Cost Cost 270 X Average Variable Profit Cost y ZTim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?
- Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to 50 1 1 ATC(Q) +;Q, average variable cost is equal to AVC(Q) =÷Q, and marginal cost is equal to 2 MC(Q) = Q. a.) Give a formula for the typical ice cream producer's average fixed cost AFC(Q). What is the typical ice cream producer's total fixed cost?The figure depicts the demand curve of a firm producing cars, together with its marginal cost, average cost, and isoprofit curves. Based on this figure, which of the following statements are correct? 8,000 Price, Marginal cost ($) 0 E Quantity of cars, Q At A, the firm makes positive profits. The firm makes the same profit at B and D. O Profit margin is the same at B and D. O The slope of the isoprofit is zero at D. MC Isoprofit A Isoprofit B AC 100Teddy J is a manufacturer of dish washing liquid. If his monthly demand function for 750ml size is q= 4000 - 250p and his total cost is C(q) = 500+0.2q. 1. Derive an expression, R(q) for Teddy J total recenue curve. 2. Derive an expression, TT(q) for teddy j profit function. 3. Determine whether Teddy J profit is increasing or decreasing when he produces 5 hundred, 750ml bottles of dish washing liquid. 4. How many 750ml bottles of dish washing liquid should Teddy J produce per month if he wishes to maximize his profits.
