In a perfectly competitive market. A company launches a new technology that gives the company considerably lower average costs than other competitors. What are the effects on price, output and profits in the short and long run
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- Suppose the shirts industry is perfectly competitive and begins in a long-run equilibrium. (a) Pluto Company invents a new production process that reduces the production cost. What happens to Pluto Company’s profits and the price of shirts in the short run when Pluto Company’s patent prevents other firms from using the new technology? (b) What happens in the long run when the patent expires and other firms are free to use the technology?In the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explain
- You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The number of farms can new firms enter the market? If they can, what will happen to the market supply curve? If they cannot enter, explain.Perfectly competitive industries have free entry and exit in the long run. When will firms decide to enter an industry? How does free entry and exit affect a perfectly competitive firm’s profit in the long run?Why don't firms in a competitive market have excess capacity in the long run?
- Juan makes dining room chairs in a perfectly competitive industry. He is looking for economic advice and tells you the following data about his business. (Assume cost curves have their standard shapes.) Total revenue is $120,000, Total fixed costs are $100,000 Total variable costs are $110,000 Marginal cost is $200/unit Quantity produced is 600 units What will you suggest to Juan? A: Shut down immediately B: Do not shut down and increase production C: Do not shut down but decrease production D: Do not shut down and do not change the current production level.What is the main feature of a perfect competitive market. Explain in long sentences.You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The equilibrium output in agricultural markets based on what happens to the price given the change in supply, what do you think will happen to the equilibrium quantity? Will it remain the same, increase or decrease?
- Explain why economic profits in all perfectly competitive markets will tend toward zero in the long run. Is this a good thing or a bad thing for producers and consumers? Explain.What are the requirements for a perfect competition market?Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.