Billy Idol's Department Store operates in a perfectly competitive market. At the point where MC=MR, ATC = $250, AVC = $175, and the price per unit is $180. In this situation, Group of answer choices Billy is earning a positive economic profit Billy should shut down immediately Billy is losing money in the short run, but should continue to operate the market price will rise in the short run to increase profits
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Billy Idol's Department Store operates in a
Billy is earning a positive economic profit
Billy should shut down immediately
Billy is losing money in the short run, but should continue to operate
the market price will rise in the short run to increase profits
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- Price 21 20 19 18 17 16 15 14 13 12 11 10 9 7 6 5 43210 3- ABCD Marginal cost A Average total cost Average variable cost 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 Quantity Which point or points are included in the firm's supply curve in the short run? None of these points are on the firm's short-run supply curve. B с DThe packaged milk market in Pakistan is perfectly competitive. (1) Some firms in the market are making profit, others are having losses. Draw and explain graphs showing MC, ATC, MR, AR, price and quantity of output to illustrate these situations. (2) In the short run some of these firms may decide to shut down temporarily. In the long run some of these firms may exit the market, and new firms may enter. Draw and explain graphs to show these situations and short run and long run supply curves. (3) If firms can enter and exit the packaged milk market in the long run but not in the short run, show how a decrease in demand due to lower incomes of Pakistani consumers during COVID Pandemic affects price and profitability.Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $25 each. His total cost each day is $300, of which $60 is a fixed cost. He mows 15 lawns a day. In the short run, Bob should shut down or not shut down. In the long run, Bob should exit or not exit the industry.
- Suppose Andy sells basketballs in the perfectly competitive basketball market. His output per day and costs are as follows: Output per Day (Q) 0 1 2 3 5 6 7 8 9 Total Cost (TC) $10.00 $20.50 $24.50 $28.50 $34.00 $43.00 $55.50 $72.00 $93.00 $119.00 1) Make a table with Quantity (Q), Total Cost (TC), Fixed Cost (FC). Variable Cost (VC), Average Total Cost (ATC), Average Variable Cost (AVC), Marginal Cost (MC), and Marginal Revenue (MR) on it (using the Long-Run Equilibrium Price). 2) To maximize profits, how many basketballs will Andy produce? Identity the profit maximizing Quantity (Q*). Price (P*), and Profit (¹).Question The graph shows the cost curves of an individual firm in a perfectly (or purely) competitive industry. Use the points A, B, C, and D to trace out the firm's profit-maximing output decisions, according to the instructions. Place point A at the shutdown decision point. Place point B at the point where the firm is making a loss but will continue to operate in the short run. Place point C at the break-even point. Place point D at the point where the firm is making an economic profit. 21 В с D 20 Marginal cost 19 18 17 16 15 Average total cost 14 13 12 Average variable cost 11 10 9 7 5 4 2 1 9. 12 15 18 21 24 27 30 33 36 39 42 titu PriceQUESTION 10 Tony sells pet collars at the Sunday markets. Assume the market for pet collars is perfectly competitive. Tony's profit maximising output is 34 collars. At this profit-maximising output level, Tony's average total cost is $4.20 per collar. His minimum average variable cost is $3.10 per collar. The market price is $5.40 per collar. Answer the following questions: (use a negative value if a loss). Answer in dollars, rounded to two a. Tony's economic profit or loss is decimal places (ie: to the nearest cent). b. State whether the following statement is true or false: "Tony's marginal cost is $4.20 per collar." Type T for true, or F for false c. At the current market price, should Tony shut down? Type Y for Yes, or N for No
- Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changed his price to $8. Why? What about a price of $5?Assume the following regarding a firm in Perfect Competition: Market Demand = Qd 460-3P Market Supply = Qs = 9 P Each identical firm has: MC=4q ATC = 14 1. What price will the firm charge? Number 2. What is the firm's equilibrium quantity? Number 3. What is the firm's total cost? Number 4. What is the firm's total revenue? Number 5. What is the firm's profit or loss? (use a negative sign to indicate a loss) Number 6. Is the firm in a short-run or long-run situation? Click for ListAnswer the following, providing a graphical illustration along with your answer where necessary:a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runabnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’spayoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?
- Answer the following, providing a graphical illustration along with your answer where necessary:a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runabnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’spayoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma? QUESTION A AND B ALREADY SOLVED, FROM C ONLY !!!Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per cupcake) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 MC 0 0.5 ATC 1.5 MR Demand 1.0 2.0 2.5 3.0 QUANTITY (Thousands of cupcakes) 3.5 4.0 At the profit-maximizing put and price, the shop's profit is equal to $ Given the profit-maximizing choice of output and price, there are + Profit Maximizing Outcome Profit Loss C. (Hint: Be sure to enter a minus sign if profit is…a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?
