The profit-maximizing (or loss-minimizing) perfectly competitive firm will want to produce the quantity of output at which the difference between MR and MC is greatest.” Do you agree or disagree with this statement? Explain your answer
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- According to marginal analysis, a perfectly competitive firm will produce an output level where what is true about its Marginal Revenue and its Marginal Cost?Explain why the firm will still operate in the market if the economic profits are equal to zero. Use the graph to support your answer.“In a perfectly competitive market, firms always operate at the lowest per-unit cost." Is the preceding statement true or false? Explain your answer.
- In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?The graph shows the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. Note, for such firms, the demand (D) curve is the same as the MR curve. Answer two questions, specifying to at least one decimal place. How many units should this firm produce to maximize profit? number of units: What price will the firm receive for each unit at the profit maximizing level out output? $ MC/MR $12 9.7 5.6 D=MR MC ATC 6.6 10.2 12 16 QuantityIf you are the manager of a perfectly competitive firm that is making a loss (TR < TC), would you decide to shut it down? Under what circumstances would you decide to operate an unprofitable business?
- you've been learning about what makes a market perfectly competitive, how a firm in a perfectly competitive market makes profit-maximizing decisions, and how a perfectly competitive market moves towards equilibirium. But how applicable is this to real life? For this discussion, try to think of a market (for a product or service) that is perfectly competitive or very close to it. What characteristics of the market make it like perfect competition? Are there factors that keep it from being perfectly competitive? If so, what are they? How close do you think the firms in this market are to perfectly competitive firms in choosing equilibrium price and quantity?You witnessed new firms entering a competitive market. What can you infer for the existing firms in that market?A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues: TC = $830,000 VC = $525,000 TR = $428,000 Given that the firm produces the level of output at which MR=MC, calculate the amount of profit (loss) this firm earns. is it Profit=TR-TC?
