Draw a graph of a typical firm and an industry market (with supply and demand). Illustrate and explain what happens in the market if at the initial price, the typical firm is earning an economic profit. Show and explain how the two graphs will adjust toward market equilibrium
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Draw a graph of a typical firm and an industry market (with
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- How does a market compete with other firms efficiently to maintain profit in a competitive market over time? Show diagram with shifts in price, cost, quantity, etc.Please graph what the market looks like with a short decrease in demand and what one firm looks like with a short run decrease in demand. Please make sure to graph your answer with all necessary labeling.Use the following graph for a competitive market to answer the question below. The horizontal axis lists quantity as 50, 150, and 250 and the vertical axis ranges from 0 through 30, in increments of 5. A decreasing curve labeled D is connecting data points (50, 25), (150, 15), and (250, 10). An increasing curve labeled S is connecting data points (50, 10), (150, 15), and (250, 25). Both curves intersect each other at the point (150, 15). A price floor of $10 per unit will result in a rev: 05_07_2018 Multiple Choice shortage of 200 units. surplus of 200 units. No shortage or surplus 50 units being traded.
- George Stigler, "Perfect Competition, Historically Contemplated," Journal of Political Economy,Vol. 55, No. 1, (February 1957), pp. 1-17. Despite the fact that few firms sell identical products in markets where there are no barriers to entry, economists believe that the model of perfect competition is important because A. economists prefer studying theoretical markets instead of actual markets. B. all markets eventually become perfectly competitive. C. it is a benchmark—a market with the maximum possible competition—that economists use to evaluate actual markets that are not perfectly competitive. D. this is the type of market that our business laws protect and promote.Using the graph answer the following questions: A: At the profit maximizing level of output, what is the firm's total revenue? B: At the profit maximizing quantity, what is the firm's total cost? C: At the profit maximizing quantity, what is the firm's profit? D: Assuming that most firms in the industry have similar costs, describe what happens in this market to bring the industry to a long-run equilibrium (where there are zero profits).Complete the table above. Graph AVC , ATC, and MC on the same graph. Suppose market price is $30. How much will the firm produce in the short run? How much are total revenue? Suppose market price is $50. How much will the firm produce in the short run? What are total profits?
- Perfect competition is an extremely rare type of market in the real world. This is because the conditions necessary for perfect competition are difficult to meet. Write about an example of perfect competition (or at least a market that is very close to perfect competition). Find an example of a market that seems to be perfectly competitive. Explain how your example satisfies the four conditions necessary for perfect competition. Do sellers in the market you’ve described brand themselves to consumers? Does this support the idea that this market is perfectly competitive? Explain. Do different sellers in the market you’ve described charge different prices for their product? Does your answer support the idea that this market is perfectly competitive? Explain. Does it seem as if the example you mentioned is allocatively efficient? In other words, does the market produce enough of this good (or does it produce too much or too little)? Explain.Suppose the book-printing industry is a competitive market, and it begins with a long run competitive equilibrium. a. Draw side-by-side diagrams to show the initial conditions of the bookprinting industry, including the condition of a typical book-printing firm and the whole industry. b. Given the rising popularity of e-books, the demand for book-printing drops. Based on the diagrams in (a), illustrate the short run effects on the market price, market output level, output level of an typical bookprinting firm and her profit. Briefly explain.Why is perfect competition assumed to be the best market situation in most cases? Draw a graph showing the long run result of perfect competition and explain why it benefits society.
- The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. a. What level of output should this firm produce in the short run? b. What price should this firm charge in the short run? c. What is the firm’s total cost at this level of output? d. What is the firm’s total variable cost at this level of output? e. What is the firm’s fixed cost at this level of output? f. What is the firm’s profit if it produces this level of output? g. What is the firm’s profit if it shuts down? h. In the long run, should this firm continue to operate or shut DOWNYou observed that in the long run, a profit-maximizing firm chose to exit a market. What can you infer about the profits of this firm?Suppose that firm is in a breaking even status in a perfectly competitive market. Using graphs (for both industry and firm) to explain how a decline in demand in the short run affects some firms’ performance (e.g., earn profits or experience loss). In the long run, how this results in exit of some firms from the same perfectly competitive market. Comment on the market equilibrium quantity and price in the long run?
