Homework Answers
Answer
The firm produces at MR=MC
where
MR>ATC and the MR=P
so the firm makes a profit in the short run.
The profit attracts new firms in the market in the long run-up to
the profit is zero in the industry and the price is equal to the
minimum average total cost.
In the long run:
1. new firms will enter the market
2. supply in the industry will increase
3. price will decrease and quantity will increase in the
industry
4. economic profit will be zero and the P=ATC.
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5. In the previous problem, if the graph represents a typical firm in this industry, what...
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Graph Worksheet MC DI MR P4 ATC P3 P2 AVC PI 02 1. What is the price and quantity at the optimum level of production? Is this an economic profit, loss, or break-even? Should the firm produce? 2. If the industry model is monopolistic competition, what will happen to the industry? What will happen to the demand and marginal revenue curves for the individual firm? In the long run where will the demand curve be? Will the firm achieve productive...
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Graph Worksheet 01 02 03 1. What is the price and quantity at the optimum level...
Graph Worksheet 01 02 03 1. What is the price and quantity at the optimum level of production? Is this an economic profit, loss, or break-even? Should the firm produce? 2. If the industry model is monopolistic competition, what will happen to the industry? What will happen to the demand and marginal revenue curves for the individual firm? In the long run, where will the demand curve be? Will the firm achieve productive and/or allocative efficiency? 3. If the industry...
PART 1 Costs & Revenue Price MC The INDUSTRY is the price maker The SINGLE FIRM...
PART 1 Costs & Revenue Price MC The INDUSTRY is the price maker The SINGLE FIRM IS a price taker S ATC ARMR D Q Q Quantity Output Price Costs Revenue The INDUSTRY is the TSINGLES a proto MC pro NOIVAL proft in the US ATC AR-MR P1 AR-MR D Q01 Q10 Output a. What type of market structure is shown in the diagram above and how did you determine this? b. What are the firm's short run profit maximizing...
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A) What is the short-run equilibrium price? B) How much output each firm produce in the...
A) What is the short-run equilibrium price?
B) How much output each firm produce in the short-run?
C) In the short-run, how much profit does each firm earn?
D) In the long-run, what do you expect to happen?
E) What is the long-run equilibrium price?
F) What is the long-run profit per firm?
G) In the long-run, how many firms will be in the industry?
Suppose that marginal cost and average total cost for the typical firm in the industry...
A firm in a purely competitive industry has a typical cost structure. The normal rate of...
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $15 on every $150 invested by its founders. Instructions: Enter your answers as whole numbers. a. What is its percentage rate of return? percent b. Is the firm earning an economic profit? (Click to select) If so, how large? percent c. Will this industry see entry or exit? (Click to select) d. What...
A firm in a purely competitive industry has a typical cost structure. The normal rate of...
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $15 on every $150 Invested by its founders Instructions: Enter your answers as whole numbers a What is its percentage rate of return? 10 percent b. Is the firm earning an economic profit? Yes If so, how large? percent c. Will this industry see entry or exit? (Click to select) d. What will...
1. Suppose the typical firm in a perfectly competitive industry has the following long-run total TC...
1. Suppose the typical firm in a perfectly competitive industry has the following long-run total TC 240Q-6Q2 +0.08Q3 What is the long-run price for product Q?
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Graph Worksheet MC DI MR P4 ATC P3 P2 AVC PI 02 1. What is the price and quantity at the optimum level of production? Is this an economic profit, loss, or break-even? Should the firm produce? 2. If the industry model is monopolistic competition, what will happen to the industry? What will happen to the demand and marginal revenue curves for the individual firm? In the long run where will the demand curve be? Will the firm achieve productive...
Graph Worksheet 01 02 03 1. What is the price and quantity at the optimum level of production? Is this an economic profit, loss, or break-even? Should the firm produce? 2. If the industry model is monopolistic competition, what will happen to the industry? What will happen to the demand and marginal revenue curves for the individual firm? In the long run, where will the demand curve be? Will the firm achieve productive and/or allocative efficiency? 3. If the industry...
PART 1 Costs & Revenue Price MC The INDUSTRY is the price maker The SINGLE FIRM IS a price taker S ATC ARMR D Q Q Quantity Output Price Costs Revenue The INDUSTRY is the TSINGLES a proto MC pro NOIVAL proft in the US ATC AR-MR P1 AR-MR D Q01 Q10 Output a. What type of market structure is shown in the diagram above and how did you determine this? b. What are the firm's short run profit maximizing...
Saved This graph represents the cost and revenue curves of a firm in a perfectly competitive market. ATC MR Q1 Q2 Q3 According to the graph shown, the long-run output decision for this firm is: Multiple Choice o Q3, РЗ. o Q1, P2. o Q2 Р. o C o1, РІ.
A) What is the short-run equilibrium price?
B) How much output each firm produce in the short-run?
C) In the short-run, how much profit does each firm earn?
D) In the long-run, what do you expect to happen?
E) What is the long-run equilibrium price?
F) What is the long-run profit per firm?
G) In the long-run, how many firms will be in the industry?
Suppose that marginal cost and average total cost for the typical firm in the industry...
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $15 on every $150 invested by its founders. Instructions: Enter your answers as whole numbers. a. What is its percentage rate of return? percent b. Is the firm earning an economic profit? (Click to select) If so, how large? percent c. Will this industry see entry or exit? (Click to select) d. What...
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $15 on every $150 Invested by its founders Instructions: Enter your answers as whole numbers a What is its percentage rate of return? 10 percent b. Is the firm earning an economic profit? Yes If so, how large? percent c. Will this industry see entry or exit? (Click to select) d. What will...
1. Suppose the typical firm in a perfectly competitive industry has the following long-run total TC 240Q-6Q2 +0.08Q3 What is the long-run price for product Q?
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