Imagine a firm in a perfectly competitive market. The firm is currently making an economic profit. Carefully explain what will happen in this market and will happen to the firm's profits in the long-run
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- The following graph shows the demand curve, as well as the AVC, ATC and MC curves of a company selling rolled oats in a perfectly competitive market. Use the graph to answer the questions. The goal of the company is to maximize its profit. How many boxes of rolled oats should it sell to attain this goal? What price will it charge? How much profit does this firm make per month? Will this company produce or shut down in the short run? Why? Will this firm exit the market for rolled oats in the long run or not? Why?How do I know this graph shows a firm that is perfectly competitive? Which curve tells me it is?The diagram below shows a perfectly competitive firm. What is the economic profit earned or loss incurred by the firm?
- If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? ExplainThe market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. Draw a graph showing this situation for a firm in the short run.A perfectly competitive firm is currently maximizing profits. The market for its product is in a long-run equilibrium. Market demand for the product decreases. Briefly explain what happens in the market by describing what will happen to this firm’s production (and most importantly why) as a result of that change. Describe what will happen and why to the firm’s costs and profits as the firm makes its choices. Emphasize why each type of individual cost does or does not change as the firm changes its level of production.
- The graph below shows a perfectly competitive firm in short run equilibrium, where the firm has chosen the output level which maximizes profit. Think about the level of profits being earned here, and what will happen over time. In the long run:The table shows some cost data for Frank's Fortune Cookies which operates in a perfectly competitive market. At a market price of $42.83 a batch, what quantity does Frank's produce and what is the firm's economic profit in the short run? When the market price is $42.83 a batch, Frank produces batches of cookies. When Frank produces 6 batches of cookies, Frank's economic profit is $ Total Average Average product (batches fixed cost variable Average cost total cost Marginal cost per day) (dollars per batch) 1 77.00 45.00 122.00 31.00 2 38.50 38.00 76.50 23.01 3 25.67 33.00 58.67 20.99 4 19.25 30.00 49.25 26.00 5 15.40 29.20 44.60 33.98 6 12.83 30.00 42.83 51.02 7 11.00 33.00 44.00 77.04 8 9.63 38.50 48.13he following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. What level of output should this firm produce in the short run? What price should this firm charge in the short run? What is the firm’s total cost at this level of output? What is the firm’s total variable cost at this level of output? What is the firm’s fixed cost at this level of output? What is the firm’s profit if it produces this level of output? What is the firm’s profit if it shuts down? In the long run, should this firm continue to operate or shut down? problem 1-6 are solved, this is subparts.
- The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. a. What level of output should this firm produce in the short run? b. What price should this firm charge in the short run? c. What is the firm’s total cost at this level of output? d. What is the firm’s total variable cost at this level of output? e. What is the firm’s fixed cost at this level of output? f. What is the firm’s profit if it produces this level of output? g. What is the firm’s profit if it shuts down? h. In the long run, should this firm continue to operate or shut DOWNQuestion 3 Of 20 Luis and Sarah just purchased a piece of land and a tractor. They plan to start growing and selling organic peas. They have heard that the market for organic peas is perfectly competitive. What does that mean in terms of long-run profit? Firms will earn zero economic profit in the long run. Firms will earn positive economic profits in the long run. Firms will earn zero accounting profit in the long run. Firms will earn negative economic profits in the long run. Luis and Sarah want to know the quantity they should produce to maximize profit. As their economic advisor, you recommend that they O produce until marginal revenue is equal to price. produce as much as possible, regardless of cost. produce until marginal cost is equal to marginal revenue. produce until price falls below the average variable cost.you've been learning about what makes a market perfectly competitive, how a firm in a perfectly competitive market makes profit-maximizing decisions, and how a perfectly competitive market moves towards equilibirium. But how applicable is this to real life? For this discussion, try to think of a market (for a product or service) that is perfectly competitive or very close to it. What characteristics of the market make it like perfect competition? Are there factors that keep it from being perfectly competitive? If so, what are they? How close do you think the firms in this market are to perfectly competitive firms in choosing equilibrium price and quantity?
