A perfectly competitive firm is hiring variable resources m and n. It will minimize total costs when A. MRPm/MFCm = MRPn/MFCn. B. MRPm ∗ MFCn = MRPn ∗ MFCm. C. Pm/MPm = Pn/MPn. D. MPm/Pm = MPn/Pn.
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A
A. MRPm/MFCm = MRPn/MFCn.
B. MRPm ∗ MFCn = MRPn ∗ MFCm.
C. Pm/MPm = Pn/MPn.
D. MPm/Pm = MPn/Pn.
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- A firm has production function q = K1/3L1/3. The firm sells output for p = 48 and acts as a price taker. They purchase inputs competitively for w = 1 and r = 4 and produce an output level to maximize profits. a. Derive and graph the firm’s long-run MC and AC curves. Illustrate and quantify the profit-maximizing level of output as Bundle A. b. Beginning in August the price of labor will permanently increase to w = 4. The firm will not be able to vary your capital stock. Derive the firm’s short-run SMC and SATC curves. Update your diagram to illustrate and quantify the profit-maximizing level of output as Bundle B. c. In September, the firm can vary both capital and labour. Derive the firm’s long-run MC and AC curves. Update your diagram to illustrate and quantify the profit maximizing level of output as Bundle C.If the average output per worker in a firm is 7 units per hour, then the average output will rise as a result of hiring another worker if * the marginal worker produces 7 units. more workers are hired. the marginal output of the next worker exceeds 7. the last worker produced less than 7 units. The long-run ATC curve of a competitive firm derives its shape from: * decreasing, then increasing, short-run returns. increasing, then decreasing, short-run returns. economies, then diseconomies, of scale. diseconomies, then economies, of scale.A profit-maximizing firm will: O reduce employment if VMPL exceeds MCL. O expand employment if the VMPL exceeds MCL. O reduce employment if VMPL equals MCL. O expand employment if VMPL equals MCL
- A firm's efficiency decision O always means hiring labor that will work for the lowest possible wage. O is strictly a short-run decision. O forces a firm to decide whether to maximize its profits or minimize its costs. O refers to a firm minimizing costs for a given level of output.You are a fleet manager for a transportation company and, as such, are interested in the changes in the gasoline market since gasoline is an input of production for your company. A hurricane in the Gulf of Mexico disrupts oil refineries. In the short-run, you predict that this hurricane will, all else equal, Select one: a. Increase the supply of gasoline, pushing down its price and increasing your company's profit. b. Decrease the demand for gasoline, pushing down its price and reducing your company's profit. c. Decrease the supply of gasoline, pushing up its price and reducing your company's profit. d. Increase the demand for gasoline, pushing up its price and increasing your company's profit.Managers of perfectly competitive firms must be cautious when deciding to permanently expand (or contract) the scale of production. What factors should go into the decision to expand the scale of production if the market price of your product increases? (select all that apply) A. Whether your product has a complement in consumption B. If the scale expansion is appropriate and not in excess C. If other firms are likely to enter the market D. Whether the price change is temporary or permanent
- Suppose that the firm’s demand curve indicates that at a price of $10 per unit, customers will demand 2 million units of its product. Suppose that management decides to pick both price and output; the firm produces 3 million units of its product and prices them at $18 each. What will happen?Modified True or False: State whether each statement is true or false. If the statement is false, briefly explain why it is so, and then restate it to make it true. The shapes of long-run cost curves follow directly from the assumption of a fixed factor of production, which implies diminishing returns. The optimal scale of plant is the scale of plant that maximizes average cost. In the long-run competitive equilibrium, each individual firm chooses a scale of operations that minimizes its long-run average cost. Answer correctly and explain within 30mins will give you positive feedback.Modified True or False: State whether each statement is true or false. If the statement is false, briefly explain why it is so, and then restate it to make it true. The shapes of long-run cost curves follow directly from the assumption of a fixed factor of production, which implies diminishing returns. The optimal scale of plant is the scale of plant that maximizes average cost. In the long-run competitive equilibrium, each individual firm chooses a scale of operations that minimizes its long-run average cost.
- Wheel Co. Ltd, operating in a competitive industry has a cost function: TC =5+13Q2 -3Q. This firm can sell whatever output it produces at $18. a. Calculate the level of output that maximizes the company's profit and calculate the wwn profit earned! b. How is the managerial decision, whether to produce or not? (explain using numbers) c. At what selling price, is it said that the company must close its business?Suppose a perfectly competitive firm uses labor and capital to produce. In the short run, the quantity of labor is variable and the quantity of capital is fixed. The cost curve estimated by the manufacturer based on capital and labor is: *EQUATION ATTACH AS PHOTO, a. What is the lowest price the manufacturer expects in the long run?b. If factors prices remain constant, what is the lowest product price that firms will continue to operate in the short run?c. If the product price is $120 , how many products will the manufacturer produce in the short run?8. siuppose that the manager of a firm operating in a competitive market has estimated the firm's average variable cost function to be: AVC= 18-0.3Q Total fixed cost is $60 and the forecasted price of the firm's product is $12. 79 a. What is the corresponding marginal cost function? b. At what output is AVC at its minimum? C. How much outputs should the firm produce? d. How much profit or loss will the firm earn?,