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2- if a perfectly competitive firm shuts dowm in the short run, its total cost equals zero.
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- TRUE OR FALSE If a perfectly competitive firm shuts down in the short run, its total cost equals zero.The graph contains the relevant cost curves for a perfectly (or purely) competitive firm. Move point A on the graph to the shutdown point. 1.000 MC 900 ATC In order for the firm to carn positive economic profits the price of the good must be above what value? B00 AVC 700 00 500 400 400 price of a good: $ 400.00 300 Incerrect 200 AFC What is the shutdown price for this firm? 100 400.00 100 200 300 400 500 000 700 B00 000 1,000 Quantity shutdown price: $ IncorrectA firm sells its product in a perfectly competitive market where other firms charge a price of $95 per unit. The firm's total cost are TC-20+5Q+Q². a. How much output should the firm produce in the short run? b. What price should the firm charge in the short run? c. What are the firm's short run profits? d. What do you expect to happen in the long run?
- A perfectly competitive industry consists of many identical firms, each with a long-run total cost function of TC = 500Q-20Q^2+0.5Q^3. a. In long-run equilibrium, how much will each firm produce? b. What is the long-run equilibrium price? c. The industry's demand curve is ?? = 48,000 − 60?. How many firms are in the I ndustry? d. If the industry demand decreases to ?? = 30,000 − 80? how will the industry respond?Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands, which sell for $10 each. At this level of output, the marginal cost is $10 and the average variable cost is $12. Should the firm increase output, decrease output, or not produce? Explain why?A profit-maximizing firm is producing where MR = MC and has an average total cost of $4, but it gets a price of $3 for each good it sells.a. What would you advise the firm to do? The firm should shut down in the short run and exit the market in the long run. The firm is producing where MR = MC, so it should produce in both the short run and long run. As long as average variable costs are less than $3, in the short run, the firm should produce. In the long run, it should exit the market. The firm should shut down in the short run. Once the firm recoups its fixed costs, it should produce in the long run. b. What would you advise the firm to do if you knew average variable costs were $3.50? The firm should exit the market in the long run, but it should produce in the short run since it is covering average fixed costs. The firm should shut down in the short run. Once the firm recoups its fixed costs, it should reopen in the long run. The firm…
- Rambutan is a fruit prized in Eastern Asia for its unique hairy look. Once peeled, it reveals a sweet, slightly sour, grape-like, gummy-tasting fruit. The graph shows the average total cost, marginal revenue, and marginal cost curves of a perfectly or (purely) competitive rambutan farmer. This firm is incurring a firms will this market. In the long run, What is this firm's profit or loss, rounded to the nearest penny? If the market price fell to $9.51, the firm would Price per bushel $12.11 10.11 9.51 MR C 5.4 A MC B ATC 7 Quantity (bushels)Figure 1 shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and Table 1 shows the market demand schedule for toys. At what market prices would the firm shut down temporarily? What is the market price of a toy in long-run equilibrium? How many firms will be in the toy market in the long run? Explain your answer.41 Output Total Total (Q) Price Revenue Cost 10 $12.00 $140 E of 20 $12.00 $220 30 $12.00 $380 40 $12.00 $620 The table above shows revenue and cost information at four different Output (Q) levels for a Perfectly Competitive firm in the short run. If the firm increases its Output from 30 to 40, Marginal Cost (MC) is. Select one: a. $12 b. $24 c. $160 d. $240
- Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost AVC - Average Variable Cost Refer to the figure above. If this firm decides to operate and is producing the profit-maximizing quantity, then the firm's profit will be: $40 $0 - $40 $2406. A firm sells its product in a perfectly competitive market where other firms charge a price of $90.00 per unit. The firm's total costs are C(Q) = 50 + 10Q + 2Q². a. How much output should the firm produce in the short run? b. What price should the firm charge in the short run? c. What are the firms' short-run profits?Firms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? Why? What would you expect the market to do in the long run? Why?