If marginal cost exceeds marginal revenue then the perfectly competitive firm will Question 5 options: a) likely be at a profit maximizing level of output b) should increase the level of production to maximize profit c) should reduce its average fixed cost in an effort to lower its marginal cost d) should decrease production until marginal revenue equals marginal cost

If marginal cost exceeds marginal revenue then the perfectly competitive firm will Question 5 options: a) likely be at a profit maximizing level of output b) should increase the level of production to maximize profit c) should reduce its average fixed cost in an effort to lower its marginal cost d) should decrease production until marginal revenue equals marginal cost

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 10QP

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A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of Rs.1000, average total cost of Rs.800, and fixed cost of Rs.20,000. a) What is its profit? b)What is its marginal cost? c) Is the efficient scale of the firm more than, less than, or exactly 100 units?
Question 6 options: The price of a product in a competitive market is $100. The cost per unit of producing the product is c=50+.1x, where x is the number of units produced each month. Find a) The monthly revenue R(x) b) The monthly cost function C(x) c) The monthly profit function P(x) d) Find x such that profit is maximized, and find the maximum profit
If a competitive firm has a U-shaped marginal cost curve then A) the profit maximizing output will always generate positive economic profit. B) the profit maximizing output will always generate positive producer surplus. C) the profit maximizing output is found where MC = MR and MC is decreasing. D) the profit maximizing output is found where MC = MR and MC is constant. E) the profit maximizing output is found where MC = MR and MC is increasing.
Which of the following is not true for a competitive market? Group of answer choices Firms can earn positive economic profits in the long run Firms sell nearly identical products There are many buyers and sellers Firms expect zero economic long-run profits
a) A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run? b) Suppose instead that this business has a fixed cost of $6,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run?
A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
With identical firms, constant input prices, and all the other characteristics of a competitive market A)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium quantity but not price. B)a shift in demand has no effect on the long-run average cost and so there is no change in equilibrium price and quantity. C)a shift in demand will change the equilibrium price and quantity. D)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium price but not quantity.
Hide student question Time Left : Suppose that the additional revenue that comes from the 100th unit is $5, and the marginal cost of the 100th unit is $4.9. Which of the following is the best strategy for a perfectly competitive firm? Group of answer choices a)the firm should not produce the 100th unit because the additional profit from the 100th unit is $0.1 b)the firm must increase production since marginal revenue is greater than marginal cost. c) the firm must decrease production because marginal cost will decrease with production. d)the firm should not increase production since the opportunity cost of the 100th unit is higher than the additional revenue.
Question a) The average cost function of a competitive firm is AC= 5/Q+5+9*Q. The optimal quantity is: 10. How much is the profit? b) The average cost function of a competitive firm is AC= 3/Q +8 +9*Q The optimal quantity is: 3 How much is the profit? c) The marginal utility of x is 100-5x, and that of y is 200- 6y. The price of x is 1, the price of y is 2, the income of the consumer is 100. How many of y is there in the optimal basket?
In a competitive market, the long-run demand is given by P = 20 - (0.01)*q Firms in the industry have as their cost structure the expression C = q3 - 5q2 + 10q. Determine: (a) equilibrium price b) Quantity produced-sold of the firm. c) What quantity is traded in the market? d) Over what time period does this market work? (short or long term?) e) What is the profit of the individual firm? f) What will be the behavior of the individual firm, will it exit or stay in the market?
Assume the market for tortillas is perfectly competitive. The market supply and demand curves for tortillas are given as follows Supply curve:P = 5Q Demand curve: P = 120 - 10Q The short run marginal cost curve for a typical tortilla factory is: MC = 20q Assuming all tortilla factories are identical, calculate the following: Equilibrium price for tortillas: 1 8 Profit maximizing short run equilibrium level of output for a tortilla factory: (2) Given profit maximizing output as above, a tortilla factory is: (3 Total number of tortilla factories: Producer surplus of a tortilla factory: (5
For a perfectly competitive firm, profit maximization occurs when output is such that A) marginal revenue (MR) = marginal cost (MC). B) total cost (TC) is minimized. C) total revenue (TR) equals total cost (TC). D) average total cost (ATC) is minimized. E) total revenue (TR) is maximized.