Balin's Burger Barn operates in a perfectly competitive market. Balin's is currently earning economic profits of $20,000 per year. Based on this information, we can conclude that Multiple Choice O Balin's profits will discourage new firms from entering. Balin's will increase its market price over the coming months. Balin's is operating in the short run, but not the long run. Balin's is operating in the long run.
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- Refer to the graph shown. Currently, if this perfectly competitive firm is maximizing profit, the market price is: marginal cost $7.00 $6.50 demand $5.00 $3.00 B $2.00 $0.00 10 30 40 50 60 70 Quantity $5.00 and marginal revenue for the firm is $3.00. O $6.50 and marginal revenue for the firm is $6.50. O $6.50 and marginal revenue for the firm is $5.00. $5.00 and marginal revenue for the firm is $5.00. Price, cost 20Sony announces Smart Tennis Sensor Tennis racket maker Babolat introduced its smart racket Play Pure Drive in 2013. Smash and Shot Stats soon followed. Now Sony is partnering with Wilson to make Smart Tennis Sensor, a device that sits at the bottom of a racket's handle and tracks every metric and statistic that a tennis player or coach could need. Source: Gizmag August 22, 2014 Explain why the economic profit that Babolat and Sony make in this market is likely to be temporary. Draw a graph to illustrate the outcome in the long run. Show the excess capacity and markup in the long run. Babolat's and Sony's economic profit from smart rackets is likely to be temporary because OA. other firms will enter the market and demand for rackets made by Babolat and Sony will decrease OB. the number of tennis players is likely to decrease OC. other firms will enter the market and the supply of smart rackets made by Babolat and Sony will decrease Selected: none 6 Oll & 7 O * 8 220 200- 180- 160- 140-…The following graph shows the marginal cost curve for Oiram-46, a competitive firm producing magic hats. Suppose that currently, the prevailing market price is $1.50 per magic hat. On the following graph, use the blue points (circle symbol) to plot Oiram-46's price line. Then use the grey points (star symbol) to indicate the profit maximizing quantity of output produced by Oiram-46. TOTAL COST (Dollars) he 12 11 10 a 8 N 3 2 1 0 + Oiram-46 7 0 MC + H 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 QUANTITY (Magic hats per week) Based on the graph, Oiram-46's profit-maximizing quantity is Demand Profit maximizing quantity ? magic hats, average revenue is $ and marginal revenue is
- The table below shows cost and revenue information for Choco Lovers, a perfectly competitive firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. Instructions: Round your answers to 2 decimal places. Choco Lovers Costs and Revenue Quantity TC ATC MC of Gift Boxes ($) ($) ($) 5 55.00 11.00 1.00 10 57.50 5.75 15 4.1667 1.00 20 72.50 2.00 25 92.50 3.70 4.00 30 122.50 40.833 6.00 Instructions: Enter your answers below as whole numbers. For profit and profit per unit, round your answers to 2 decimal places. Include a negative sign if necessary. 4 Profit-maximizing price Profit-maximizing quantity = Total revenue = Profit = %3D Profit per unit = 12 Next > %24 %24 %2419. The figure shows the short run conditions of a firm in a perfectly competitive market. In the long run, ------------will ----------the industry so that the market supply curve shifts to the ----------until prices-------sufficiently to allow all firms to make a normal profit only. MC AC R13 R10 AR = MR E Quantity 1200 a) Existing firms, exit, right, drop b) New firms, enter, right, drop c) Existing firms, exit, left, rise d) New firms, enter, left, rise Unit revenue and costPerfect competition is a theoretical market structure in which the followingcriteria are met: All firms sell an identical product. All firms are price takers.Market share has no influence on prices. Given the characteristics describedabovei. Describe the factors that drive profits to zero in perfectly competitivemarkets in the long run. Explain carefully the incentives that drive themarket to a long run equilibrium. ii. Why would a firm choose to operate at a loss in the short run? iii. When do firms decide to shut down production in the short run?
- Consider the competitive market for rhodium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 80 2233 22 72 64 56 80 48 72 64 56 48 40 00 32 24 16 0 0 MCD ATC Demand 0 AVC The following graph plots the market demand curve for rhodium. -0. ☐ 3 6 9 12 15 18 21 QUANTITY (Thousands of pounds) D Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30…ume the pizza market is a perfectly competitive constant cost industry, and all firms have identical homogenous firms). The market demand and market supply functions for this perfectly competit stry are given below. L 0 1 2 3 4 5 6 7 8 9 q=TP 0 10 20 30 40 50 60 70 80 90 TC 100 205 2.45 280 340 430 545 720 930 1190 P = 30.5-.005Q P = 1.7+.003Q TFC TVC 100 0 100 105 20.50 10.50 100 145 12.25 7.25 100 180 9.33 6.00 100 240 8.50 6.00 100 330 8.60 6.60 100 445 9.08 7.42 100 620 10.29 8.86 100 830 11.63 10.38 100 1090 13.22 12.11 ATC AVC MC 10.50 4.60 3.50 6.00 9.00 11.5 17.50 21.00 26.00Assume the table below is extracted from Dodi company Ltd a perfectly competitive firm selling cabbages. Assume that when the firm’s selling price is AUD 15, the marginal revenue is also AUD15. Complete the table below and answer the questions that follow. Quantity (Kg) AVC AFC ATC MC 2.50 7.50 5.10 3.50 9.00 3.00 9.00 4.50 10.00 2.50 12.50 5.50 14.00 1.80 13.00 6.00 18.00 1.67 15.00 10.00 25.00 1.43 16.00 Qty = Quantity; AVC=Average variable cost; AFC = Average fixed cost; ATC=Average Total Cost; MC= Marginal Cost; Rev = Revenue; MR= Marginal Revenue; Kg = Kilogram Based on your answers to the table above, identify the profit maximizing quantiy supplied by the firm. Calculate the amount of profit/loss at this optimal point. Show your work.
- ion 4 of 20 The accompanying graph depicts the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves A Perfectly Competitive Firm for a perfectly (or purely) competitive firm. 20 19 MC Move point A to identify the profit maximizing price and 18 17 quantity for this firm. 16 15 14 ATC 13 MR = D 12 11 10 9 8 6 5 4 3 A 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity Price and CostUniversal Shampo0 is a price taker firm. Its costs are: Output (Shampoo per hour) Total Cost ($ per hour) 10 21 30 41 4 54 69 a. Calculate Universal's profit-maximizing output and economic profit if the market price is () $14 a shampoo. (i) $12 a shampoo (i) $10 a shampoo b. What is Universal's shutdown point and its economic profit if it shuts down temporarily? C. At what price will irms with costs identical to Universal's exit the Shampoo market in the long run? id. At what price willfirms with costs identical to Universal's enter the Shampoo market in the long run? 2.Dana is a dot-com entrepreneur who has established a Web site at which people can design and buy awatch. Dana pays $200 a month for a Web server and Internet connection. The watches that customers design are made to order by another firm, and Dana pays this firm $60 a watch. Dana has no other costs. The table shows the demand schedule for Dana's watches. What is Dana's profit-maximizing output, price, and economic profit? Dana's profit-maximizing output is Dana's profit-maximizing price is $ Dana's economic profit is $ a month. watches a month. a watch. Price (dollars per watch) 100 80 60 40 20 0 Quantity (watches per month) 0 20 40 60 80 100
