Under conditions of perfect or pure competition, or close to those conditions, producers (firms) are what are called “price takers”. This means that the price for the product that they are selling is determined by the market. No matter how little or how much product they supply, they can sell all they want at that price. If they were to price their product higher, they will sell zero. Which of the following is true? The price is equal to marginal revenue but not average revenue The price is equal to marginal revenue and average revenue The price is equal to average revenue but is not equal to marginal revenue The price is above both marginal revenue and average revenue

Under conditions of perfect or pure competition, or close to those conditions, producers (firms) are what are called “price takers”. This means that the price for the product that they are selling is determined by the market. No matter how little or how much product they supply, they can sell all they want at that price. If they were to price their product higher, they will sell zero. Which of the following is true? The price is equal to marginal revenue but not average revenue The price is equal to marginal revenue and average revenue The price is equal to average revenue but is not equal to marginal revenue The price is above both marginal revenue and average revenue

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 1MC

See similar textbooks

Similar questions

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.
The information below applies to a competitive firm that sells its output for $45 per unit. When the firm produces and sells 100 units of output, its average total cost is $24.5.When the firm produces and sells 101 units of output, its average total cost is $24.65. Suppose the firm is currently producing and selling 100 units of output. Should the firm increase its output to 101 units? a. Yes, because the marginal revenue exceeds the marginal cost. b. Yes, because the marginal revenue exceeds the average total cost c. No, because the marginal cost exceeds the marginal revenue. d. No, because the average total cost exceeds the marginal revenue.
The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. The price of fertilizer must be equal to average variable cost. The price of fertilizer must be less than marginal cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Price and Costs a. a MC Firm ATC LAVO II Quantity Ⓒ Price 0 a Demand Market Quantity ?
Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.
Suppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $28.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) Price (dollars per box) 40- 36- 32- 28- 24- 20- 16- 12- 8- 4- 0 10 20 30 40 50 60 70 80 Output (boxes of peaches per day) MC ATC 90 100 oo Q
In perfect competition, each company generates a fraction of the total production so small that increasing or decreasing its production will have a perceptible influence on the total supply and the price of the product. True or false
In the US cotton market, each farm having the cost function c(q)=0.5q^(2)+ 10 q+162 where q is the quantity of cotton in tons produced by each farm. The market demand curve is given by Q^(d)=10,400-50 p. Suppose the government gives each farm a subsidy of $8 per ton. Calculate the long-run market price assume the market is perfect competition. $20 $25 $30 $35 With all steps clearly
The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. The price of fertilizer must be equal to average variable cost. The price of fertilizer must be less than marginal cost. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Average total cost will decrease. The quantity supplied by each firm will decrease. The total quantity supplied to the market will decrease. Marginal cost will decrease. The price of fertilizer will increase.
The data in the following table give information about the price P (in dollars) for which a perfectly competitive firm can sell a unit of output and the total cost of production, where quantity is q, total cost is C, marginal cost is MC, total revenue is TR, marginal revenue is MR, and profit is . Fill in the blanks in the following table. (Enter your responses using integers.) q 0 1 Further, profit will 2 3 4 5 6 7 8 9 10 11 C 100 150 178 198 212 230 250 272 310 355 410 475 MC TR Show what happens to the firm's output choice and profit if the price of the product falls from $50 to $40. If the market price falls from $50 to $40, then the firm's output will from $ to $ from P = 50 MR (Enter your responses using integers.) units to π TR P = 40 MR units. (Enter your responses using integers.) π
A perfectly competitive industry is in long-run equilibrium. Each of the identical firms has a long- run cost function C = 100 + q². As a result, a firm's marginal cost function is MC = 2q. In the long-run competitive equilibrium, (a) How much does the firm produce? (b) What is the equilibrium price? (c) If the market quantity demanded at the equilibrium price is Q = 2500, how many firms are in the market?
The connection between marginal revenue and price depends on a business's competitive environment. Why are marginal revenue and price the same for a business that is price taker in perfect competition ? Why is marginal revenue less than price for a business that is a price maker?
Consider a perfectly competitive market where all firms produce using the same technology. In the long run the equilibrium price equals (Need help? Read chapter 4.6 of the textbook, here: https://playconomics.com/textbooks/view/playconomics4-2019t3/part2/ch4/s6) the Fixed Cost. the minimum Marginal Cost. the minimum Average Total Cost. the maximum Average Variable Cost. None of these.