Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 10.6, Problem 3QQ
To determine
Normal profit.
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If the price that a firm with no market power receives is $10,
its minimum AVC is $8 and its minimum ATC is $15 then
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a. the firm will make a loss and shut down immediately
b. the firm can make a profit
c. it will make a loss and choose to continue to produce in the short run
d. the firm enjoys increasing returns to scale.
e. None of the above.
Don't use chatgpt, I will 5 upvotes
Refer to Figure 14-1. If the market price is P2, in the short run, the perfectly competitive firm will earn ◻ positive economic profits. negative economic profits but will try to remain open. zero economic profits. negative economic profits and will shut down.
If the market price is at point B and the firm shown to the right is producing at point B, it
A. earning an economic profit.
B. just breaking even.
C. at the shutdown point.
earning a short-run economic loss.
Using the rectangle drawing tool, draw and label a rectangle that shows the firm's profit or
loss.
Note: Carefully follow the instructions above and only draw the required object.
Cost per unit ($)
9.00
8.00-
7.00-
6.00-
5.00
4.00
3.00
2.00
1.00
0.00+
A
2
B
Units of output
MC
ATC
AVC
o o
13
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Similar questions
- P P₂ Pr A Q₂ Q₂ Q₂ Output Quantity Refer to the above figures for the typical firm in a competitive market. If the market demand curve is D₁, what happens in the long run? B C MC D Firm entry occurs. Firm exit occurs. ATC Most firms do nothing. Quantity Most firms incur an economic loss.arrow_forwardQUESTION 18 $20- ATC 15 10 5 30 40 50 Quantity 10 20 60 70 80 The diagram shows the average total cost curve for a purely competitive firm. At the long-run equilibrium level of output, this firm's total revenue O is $400. O is $40. O is $10. O cannot be determined from the information provided.arrow_forward8 Price and Cost (dollars) 4 6 S 3 N - 0 60 50 30 I Refer to the graph above. The perfectly competitive, profit-maximizing firm will produce units of output. 70 MC 10 ATC 10 20 30 40 50 60 70 80 Quantity -darrow_forward
- A competitive firm has a total cost is given by: TC = 0.2q² + 12q + 200. If the market price is $60. What is the firm short run supply curve? a. q = 2.5P - 30 O b. P = 0.2q2 + 12 c. q = 0.4P + 12 O d. P = 0.2q + 12 Clear my choicearrow_forwardGive typing answer with explanation and conclusion 4. Suppose the competitive firm faces a price of $50, an average variable cost of $33, and has an average fixed cost of $5. In the short-run, this firm A.cannot cover all its costs, and will have a loss per unit of $12. B.can cover all its costs, and will have a profit per unit of $12 . This is the correct answer. C.cannot cover all its costs, and will have a loss per unit of $12. D.can cover all its costs, and will have a profit per unit of $17arrow_forwardThe profit maximizing output level for this firm is A. 0. B. 25. C. 40. D. 70. E. somewhere between 40 and 70.arrow_forward
- in the short run firms in perfect competition will still produce provided the: 1. price covers fixed costs 2. price covers variable costs 3. the price covers average fixed costs 4. the price covers average variable costarrow_forwardRefer to the figure above. When the demand curve is given by P2 = $15, this firm should ______ A. continue to operate in the short run and think about shutting down in the long run B. discontinue operation in the short run since there is a loss when operating. C. keep operating as long as loss is not greater than total cost D. discontinue operation in the short run since average total cost is greater than price. When the demand is P3 = $10, this firm should ______ A. continue to operate in the short run and think about shutting down in the long run B. discontinue operation in the short run since the firm is unable to cover variable costs. C. keep operating as long as loss is not greater than total cost D. discontinue operation in the short run since average total cost is greater than price.arrow_forwardPerfect 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 $240arrow_forward
- A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. bIf the firm produced, the firm's total variable cost must be lower than $100. cIf the firm produced, the firm's losses would have been higher than $100. dIf the firm produced, the firm's total variable cost would have been higher than $100.arrow_forwardIn the long run, a perfectly competitive firm will earn a negative market return. a positive profit. a loss. a normal profit. O excess profit.arrow_forwardThe table below shows cost and revenue information for Choco Lovers, a purely competitive firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. Instructions: Enter your answers rounded to two decimal places. Quantity of Gift Boxes 20 25 30 35 40 45 b. Total revenue = Choco Lovers Cost and Revenue TC ($) ATC ($) 5.75 5.50 5.42 c. Profit = $ 227.50 d. Profit per unit = $ 115.00 137.50 162.50 192.50 232.50 282.50 Assume the profit-maximizing price is $8 per gift box, and then answer the following questions: a. Profit-maximizing quantity = 35 gift boxes 12 5.81 6.28 MC ($) per gift box 5.00 4.50 5.00 6.00 8.00 10.00arrow_forward
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