The market for corn is perfectly competitive and all firms are in long-run equilibrium currently. What will happen in the market if the incomes of corn consumers rise, assuming corn is an inferior good? Use two appropriately labelled graphs of the market and the individual perfectly competitive firm to explain.
Q: In the long-run, any perfectly competitive firm that produces will choose a quantity such that
A: The market is a location where the transaction of services and commodities takes place. It is…
Q: Explain briefly why a firm under perfect competition is a price taker not a price maker?
A: A market is the collection of buyers and sellers. There are different forms of markets based on…
Q: Can a perfectly competitive firm set its own market price?
A: Perfect or pure competition is a form of market in which a large number of perfectly informed buyers…
Q: How is it possible for perfectly competitive firms to maximize profit in the short run versus in the…
A: Perfect competition: Under the perfect competition market, the price is decided by the demand and…
Q: The market for fertilizer is perfectly competitive. Firms in the market are producing output but are…
A: Perfect competition: The market in which competition is at its greatest possible level.
Q: What type of economic profit can most firms expect to make in the long run? Explain your answer.
A: A market is a place where buying and selling of goods and services takes place.
Q: In the short run, if a competitive firm is making profit, the firm should produce. But if a…
A: A firm incurs losses if the total costs exceed the total revenue. The excess of the total cost over…
Q: must each perfectly competitive firm be in equilibrium if the industry is in the long-run…
A: Perfect competition refers to the situation where there are large number of prouder and consumers…
Q: At what output does a perfectly competitive firm maximize its profit? when marginal cost equals…
A: A perfectly competitive firm is the one where there are large number of buyers and sellers selling…
Q: Refer to the graphs above of perfectly competitive firms. Which of the following statements is…
A: In graph 1, the firm is earning economic profit as price is above the ATC. The profit maximizing…
Q: The basic model of pure competition reviewed in this chapter finds that in the long run all firms in…
A: The pure competition indicates that the market is perfectly competitive. The main features of the…
Q: The graph below shows a perfectly competitive firm in short run equilibrium, where the firm has…
A: The profit-maximizing output level is acquired at the intersection of the marginal cost and marginal…
Q: Explain why perfectly competitive firms are classified as a price taker
A: Answer - Price Taker Firm - The price taker firm are those firm who has not the ability to influence…
Q: Suppose that the pertectly competitive tuna industry is in long-run equilibrium at a price of $3 per…
A: At long run equilibrium, equilibrium price is $3 and equilibrium quantity is 600 million cans.
Q: Explain why a perfectly competitive firm earns zero economic profits in the long run.
A: In an economy, different types of markets exist to make an exchange of different types of products.…
Q: Consider the competitive market for products known as Bergers where there are 500 firms – with each…
A: Perfect competition is a market structure where there is a large number of buyers and sellers exists…
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: In a perfectly competitive market, how do we go from a short run equilibrium to a long run…
A: A perfect competitive market is one there many firms offer homogenous product to a large group of…
Q: Given the following information, state whether the perfectly competitive firm will shut down or…
A: The firm's production decision in short-run is based only on the variable cost and not fixed cost.…
Q: Is it true that a firm in a perfectly competitive market will never be able to earn positive…
A: There are different types of market which are broadly grouped as: Perfect competition and Imperfect…
Q: According to the corn market depicted below, what do we expect to happen as this market transitions…
A: In the long run, a perfectly competitive firm makes zero economic profit. Attracted by the positive…
Q: Aji Fatou owns a rental space in New York and is thinking of opening a restaurant in that space. The…
A: Accounting profit refers to the net income for a corporation or sales less costs. You may calculate…
Q: Explain why a competitive firm’s marginal cost curve is the same as its supply curve.
A: In perfectly competitive market there are many sellers as well as buyers. Price is given that means…
Q: equilibrium
A: The equilibrium of the perfectly competitive firm from the equilibrium of the industry is different…
Q: The graph depicts the average total cost curve for a perfectly competitive firm. At the long-run…
A: In a perfectly competitive market, price is constant at all levels of output so it is equal to…
Q: Graphically explain the profit maximization condition of a perfect competitive firm.
A: In the perfectly competitive market, a firm experiences a situation that the average revenue will be…
Q: In the long-run, perfectly competitive firms produce at the point where P = ATC MR = MC…
A: in perfect competitive market, there are many number of sellers and buyers which turns the market…
Q: Based on the characteristics of perfectly competitive market explain why firms in this market are…
A: Perfect competition is a type of market structure in which there are large number of buyers and…
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: Consider a perfectly competitive market for wheat in San Diego. There are 80 firms in the industry,…
A: No of firms in the industry = 80 Supply curve of each firm starts with minimum AVC and is equal to…
Q: Graphically show how the profit-maximizing level of output is determined for the perfectly…
A: Perfect competitive firm is a price taker and can sell any quantity of commodity at the market…
Q: In the long-run, perfectly competitive firms produce at the point where P = ATC MR = MC P = MC All…
A: Perfectly competitive market refers to a market structure where there are many firms and buyers.…
Q: Graphically show the market and firm graphs for the perfectly competitive long run market when firms…
A: Initial long-run equilibrium in the market and firm. It is given that it is a perfectly competitive…
Q: Why a competitive firm is price taker? Explain graphically why perfect competition is preferable to…
A: When the following conditions exist, firms are said to be in perfect competition: (1) many firms…
Q: What is the most important decision a perfectly competitive firm must make to maximize profit? what…
A: In a perfectly competitive market, there are many buyers and sellers. The good produced is…
Q: When new firms enter a perfectly competitive market in which firms are making an economic profit,…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Explain why P=MC in the short run equilibrium of the perfectly competitive firm, whereas in long run…
A: Economic efficiency includes the allocative (P = MC) and productive (MC = AC) efficiencies. Both…
Q: How much output should Sindbad produce to maximize his profit, if the market price is equal to $11?…
A: A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the…
Q: The diagram above shows a Perfectly Competitive market on the left, and a representative firm…
A: In the given industry demand and supply, the equilibrium price is 7 $. At this price the firm in the…
Q: What is the shape of the demand curve faced by the perfectly competitive firm? Explain your answer…
A: Perfect competition is the type of market structure in which there are many buyers and sellers of a…
Q: The following diagrams show the market for a good, as well as the cost curves for an individual firm…
A: The below curve shows the individual firm's cost curve and the second graph shows the market demand…
Q: In the short-run, competitive firms want to shut down if P = MC P = AVC P > AVC…
A: A perfectly completive market is where several sellers and buyers are involved in the exchange of an…
Q: What is the meaning of ‘acceptable loss’ for a perfectly competitive firm ?
A:
Q: Explain the three possible profit maximizing positions of perfectly competitive firms in the…
A: The various forms of market structure include perfect competition, oligopoly, monopoly, and…
Q: At the profit-maximizing output level, what will be the relationship between the perfectly…
A: A profit-maximizing output level is when that gives highest returns to the firm as any change in…
Q: In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?
A: When the firms earn economic profit in the short run, new firms will enter in the market cause…
Q: In the market for running shoes, all the firms face a similar demand curve and have similar cost…
A: Since we only answer up to 3 sub-parts, we will answer the first 3. Please resubmit the question and…
The market for corn is
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.Suppose the market for apples is perfectly competitive. The first graph depicts the supply and demand curves for the market for apples. The second graph represents an individual apple grower. Graph the demand curve the individual grower faces by placing the endpoints of the firm demand curve in the correct locations. Market for apples Individual apple grower Price of apples ($/bushel) 10 $10 9 9 8 8 S 7 7 6. 6. 5 4 3 D 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Bushels of apples (thousands) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Bushels of apples (hundreds) Firm demand curve Price of apples ($/bushel)Suppose that firm is in a breaking even status in a perfectly competitive market. Using graphs (for both industry and firm) to explain how a decline in demand in the short run affects some firms’ performance (e.g., earn profits or experience loss). In the long run, how this results in exit of some firms from the same perfectly competitive market. Comment on the market equilibrium quantity and price in the long run?
- 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.the demand curve for a competitive firm isConsider the competitive market for sports jackets. 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 jackets 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 jackets 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. Price Quantity Produce or Shut Down? Profit or Loss? (Dollars per jacket) (Jackets) 4 8 12 36 48 60 On the following graph, use the orange points (square…
- Consider the competitive market for sports jackets. 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 jackets 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 jackets 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.Explain how economics make profit or loss when firms are perfectly competitive.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.
- Suppose the market for beans is perfectly competitive. The average total cost and marginal cost of growing beans in the long run for an individual farmer are illustrated in the graph to the right. According to the graph, the long run equilibrium price for beans is $ per box. (Enter a numeric response using a real number rounded to two decimal places.) C Price and cost (dollars per box) 10- 9- 00 N 1 0 10 MC 20 30 40 50 60 70 80 Quantity of beans (boxes per week) ATC 90 100 NPerfect 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). Find an example of a market that seems to be perfectly competitive. Explain how your example satisfies the four conditions necessary for perfect competition. Do sellers in the market you’ve described brand themselves to consumers? Does this support the idea that this market is perfectly competitive? Explain. 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 table shows some of the costs of production for Marie's Fortune Cookies. The fortune cookie market is a perfectly competitive market. At a market price of $62.99 a batch, what quantity does Marie's produce and what is the firm's economic profit in the short run? Do firms enter or exit the market? At a market price of $62.99 a batch, Marie's produces batches of fortune cookies. In the short run, Marie's maximizes its profit and In the long run, firms O A. enter O B. neither enter nor exit O C. exit the fortune cookie market. of $ a day. Total product (batches per day) 1 2 3 4 5 6 7 8 Average Average Average fixed variable total cost cost cost (dollars per batch) 44.00 132.00 88.00 44.00 29.33 22.00 17.60 14.67 12.57 11.00 37.00 32.00 29.00 28.20 29.00 32.00 37.50 81.00 61.33 51.00 45.80 43.67 44.57 48.50 ** *** **** **** Marginal cost 30.00 21.99 20.01 25.00 33.02 49.97 76.01