5. Questions and Problems 8 You read in a business magazine that computer firms are reaping high profits. With the theory of perfect competition in mind, what do you expe happen over time? Complete the following sentences to describe the long-run adjustment. The number of computer firms in the market will increase The number of computers in the market will decrease Computer prices will The profits of computer firms will

5. Questions and Problems 8 You read in a business magazine that computer firms are reaping high profits. With the theory of perfect competition in mind, what do you expe happen over time? Complete the following sentences to describe the long-run adjustment. The number of computer firms in the market will increase The number of computers in the market will decrease Computer prices will The profits of computer firms will

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 13P

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JYour business has the capacity to produce up to 5 units/week. The table & graph below show average cost (AC) for different weekly production levels. Your objective is to maximize profit each week. Average Cost 22 20 AC 18 1 20 14 2 15 12 3 12 10 1 2 4 4 13 Quantity 15 Your product sells in the market for $21/unit, and you can sell as many units at that price as you can bring to market. You know from your economics training that deciding how much to produce should rely on marginal concepts like marginal cost (MC). So, based on the AC table above, create a table that shows the MC of each unit. (Assume that there are no fixed costs, so total costs are zero if Q=0.) Based on MC for each unit, determine the profit-maximizing quantity to produce and sell. BRIEFLY explain your answer. (Your answer needs to be based on MC and being able to sell each unit for $21.) AC ($/unit)
3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.
for this graph answer the following question what is the total revenue? what is the total profit? what is the maximun point?
8. Suppose the book-printing industry is competitive and begins in long-run equilibrium. a. Draw a diagram describing the typical firm in the industry. b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What hap- pens to Hi-Tech's profits and the price of books in the short run when Hi-Tech's patent prevents other firms from using the new technology? c. What happens in the long run when the patent expires and other firms are free to technology? 1 use the
3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.
Using graph, explain when the firm in a competitive market is in equilibrium?
Suppose Becky runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Becky's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Becky produces, including zero shirts. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 -25 1 2. 4 6. 7 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars) 25
MC ATC 20 -MR 16 30 40 Firm What is the amount of profit for the firm in the graph?
Briefly explain the reason for why in a competitive market we expect economic profits to be zero inthe long run. Why do firms operate even though they face 0 economic profit?
Next question ice and cost (dolars per par) The graph shows the long-run situation facing a producer of running shoes. In the market for running shoes, all the firms face a similar demand curve and have similar cost curves 120- Draw a vertical arrow that shows the firm's markup at the profi-maximizing quantity. Label R. MC t004 What is a fim's markup? /ATC A fem'u markup is the amount by which exceeds OA price; average total cost 60 OB. price, marginal cost OC. average total cost marginal revenue OD. average total cost marginal cost 20- Describe the market of a firm in perfect competition MR O 25 7 100 1is e ths 200 zis Quantity (pain of shoes per week) A firm in perfect competition has OA a markup similar to a firm in monopolistic competition OB. no markup > Draw only the objects specfied in the question Oc. a negative markup O D. a markkup similar to a monopoly
Review View Tell me what you want to do... Aa - 三 AaBbCcDc AABBCCI AaBbCcD AaBbC ,吵,A T Normal Body Text 1 No Spac. Heading 1 Paragraph Styles Question 2. MC ATC A VC 2.8 10 11 12 Quan lily (per day 8 The graph above skows the cost structure of a perfectly competitive firm. Use the graph above to answer the following questions. a. At which price the firm will earn zero economic profit b. What is the shut-down price? c. Above what price the firm will earn positive economic profit? d. At what price range the firm will incur a loss? Why would it continue the production? Explain. e. Show the supply curve of the firm on the graph. Explain. | 99+ ASUS Price and cosb (dollas)
A market is in long-run equilibrium and firms inthis market have identical cost structures. Supposedemand in this market decreases. Describe whathappens to the market quantity as the market leavesand then returns to long-run equilibrium