Homework Answers
In short run, any firm should produce anytime the market is above marginal cost brcause at this point the marginal cost equals marginal revenues and hence profit is maximum even if it is less than average cost.
At this point firm has good probability to achieve economies of scale and breakeven and hence should produce above its marginal cost.
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2. A firm looses money if it produces at less than its average cost. In the...
please answer all 16. To say that a firm is a price taker means that: a....
please answer all
16. To say that a firm is a price taker means that: a. the firm's demand curve is perfectly inelastic b. the firm's marginal revenue curve is downward sloping c. the firm's average total cost curve is horizontal d. the firm can alter its output without influencing price e. all of the above 17. In a perfectly competitive market, the demand curve facing the firm is: a. identical to the market demand curve b. perfectly clastic even...
Suppose a perfectly Competitive firms minimum average variable cost is $1 when it produces 50. If...
Suppose a perfectly Competitive firms minimum average variable cost is $1 when it produces 50. If the price is $2 and the firm's marginal cost is $2 the firm should Continue to produce, but produce less than 50 Continue to operate, but produce more than 50 Shut down Continue to produce 50 To maximize economic profit of perfectly competitive firm: will sell its goods below the market price all of the above will sell its goods above the market price...
8. In the short run, a perfectly competitive firm will shut down if it is producing...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
7. A profit maximizing firm in a competitive market produces replica toy cars. Suppose the market...
7. A profit maximizing firm in a competitive market produces replica toy cars. Suppose the market price for replica toy cars decreases to $12. At the profit maximizing (loss minimizing) quantity of 20,000 toy cars, the ATC is equal to $15 and the AFC is equal to $5. Given these conditions the (x) firm will experience losses of $60,000 since price is less than average total cost. (y) the firm will continue to produce 20,000 toy cars since it would...
In the short run, a perfectly competitive firm produces output using capital services (a fixed input)...
In the short run, a perfectly competitive firm produces output using capital services (a fixed input) and labour services (a variable input). At its profit-maximizing level of output, the marginal product of labour is equal to the average product of labour. a. What is the relationship between this firm's average variable cost and its marginal cost? O Average variable cost is higher than marginal cost O Average variable cost equals marginal cost O Average variable cost is less than marginal...
If a profit maximizing firm has a fixed cost of $3000 and an average variable cost...
If a profit maximizing firm has a fixed cost of $3000 and an average variable cost of $40 per unit but a maximum output of 50 units. The firm cannot avoid the fixed costs in the short run but can avoid the fixed costs by shutting down in the long run. The firm should A) produce output at prices no less than $40 and supply 50 outputs at prices above $40 B) produce output at prices no less than $100...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC),...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC), and long-run average cost (LATC) curves of a typical perfectly competitive firm that uses only labour and physical capital to produce its product and the current market price (PⓇ). S/unit MC ATC LATC B Pa E Q1 Q2 Quantity a) How many units of output would the firm choose to produce in the short run? Explain. b) Is the firm making an economic profit...
· Question 1 The unit contribution margin (in the break-even analysis) refers to: The price of the product less its average variable cost The price of the product less its average fixed cost...
· Question 1 The unit contribution margin (in the break-even analysis) refers to: The price of the product less its average variable cost The price of the product less its average fixed cost The price of the product less its marginal cost The price of the product less its average total cost · Question 2 When the firm produces at the loss-minimizing output, marginal profit is: Zero Positive Negative Can be positive, negative or zero · Question 3 When marginal...
6. (10 points) Draw a graph showing the short-run average total, average variable, and marginal cost curves for a typical firm. Draw in three prices that result in the firm making positive profits, b...
6. (10 points) Draw a graph showing the short-run average total, average variable, and marginal cost curves for a typical firm. Draw in three prices that result in the firm making positive profits, breaking even, and making negative profits that are less than fixed costs.
6. (10 points) Draw a graph showing the short-run average total, average variable, and marginal cost curves for a typical firm. Draw in three prices that result in the firm making positive profits, breaking even,...
A perfectly competitive firm will earn a profit in the short run when it produces the...
A perfectly competitive firm will earn a profit in the short run when it produces the profit-maximizing quantity of output and the price is: 1) greater than marginal cost. 2) less than marginal cost. 3) less than average variable cost. 4) greater than average total cost.
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16. To say that a firm is a price taker means that: a. the firm's demand curve is perfectly inelastic b. the firm's marginal revenue curve is downward sloping c. the firm's average total cost curve is horizontal d. the firm can alter its output without influencing price e. all of the above 17. In a perfectly competitive market, the demand curve facing the firm is: a. identical to the market demand curve b. perfectly clastic even...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
In the short run, a perfectly competitive firm produces output using capital services (a fixed input) and labour services (a variable input). At its profit-maximizing level of output, the marginal product of labour is equal to the average product of labour. a. What is the relationship between this firm's average variable cost and its marginal cost? O Average variable cost is higher than marginal cost O Average variable cost equals marginal cost O Average variable cost is less than marginal...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC), and long-run average cost (LATC) curves of a typical perfectly competitive firm that uses only labour and physical capital to produce its product and the current market price (PⓇ). S/unit MC ATC LATC B Pa E Q1 Q2 Quantity a) How many units of output would the firm choose to produce in the short run? Explain. b) Is the firm making an economic profit...
6. (10 points) Draw a graph showing the short-run average total, average variable, and marginal cost curves for a typical firm. Draw in three prices that result in the firm making positive profits, breaking even, and making negative profits that are less than fixed costs.
6. (10 points) Draw a graph showing the short-run average total, average variable, and marginal cost curves for a typical firm. Draw in three prices that result in the firm making positive profits, breaking even,...
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