Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 22.1, Problem 3ST
To determine
Explain why a
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In the long-run equilibrium of a competitive market with identical firms, what are the relationships among price (P), marginal cost (MC), and average total cost (ATC)?
Evaluate the following statements. If a statement is true, explain why. If it is false, identify the mistake and correct the error. Assume the market is perfectly competitive.
A profit-maximizing firm should select the output level at which the difference between the market price and marginal cost is greatest.
An increase in fixed cost lowers the profit-maximizing quantity of output produced in the short run.
Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run?
Chapter 22 Solutions
Economics (MindTap Course List)
Ch. 22.1 - Prob. 1STCh. 22.1 - Prob. 2STCh. 22.1 - Prob. 3STCh. 22.1 - Prob. 4STCh. 22.2 - Prob. 1STCh. 22.2 - Prob. 2STCh. 22.2 - Prob. 3STCh. 22.2 - Prob. 4STCh. 22.3 - Prob. 1STCh. 22.3 - Prob. 2ST
Ch. 22.3 - Prob. 3STCh. 22.3 - Prob. 4STCh. 22.4 - Prob. 1STCh. 22.4 - Prob. 2STCh. 22 - Prob. 1QPCh. 22 - Prob. 2QPCh. 22 - Prob. 3QPCh. 22 - Prob. 4QPCh. 22 - Prob. 5QPCh. 22 - Prob. 6QPCh. 22 - Prob. 7QPCh. 22 - Prob. 8QPCh. 22 - Prob. 9QPCh. 22 - Prob. 10QPCh. 22 - Prob. 11QPCh. 22 - Prob. 12QPCh. 22 - Prob. 13QPCh. 22 - Prob. 14QPCh. 22 - Prob. 15QPCh. 22 - Many plumbers charge the same price for coming to...Ch. 22 - Prob. 17QPCh. 22 - Prob. 18QPCh. 22 - Prob. 1WNGCh. 22 - Prob. 2WNGCh. 22 - According to the accompanying table, what quantity...Ch. 22 - Prob. 4WNGCh. 22 - Prob. 5WNGCh. 22 - Prob. 6WNGCh. 22 - Prob. 7WNGCh. 22 - Prob. 8WNGCh. 22 - Prob. 9WNGCh. 22 - Prob. 10WNG
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- The market for paperback detective novels is perfectly competitive. We have two types of book publishers in the market- Small Press and Large Press. Each Small Press publisher's supply curve is given by P=76+5Q. Each Large Press publisher's supply curve is given by Q=2P-24 Suppose there is only 1 publisher of each type. What is market supply when market price is $60? Enter a number only. Remember, fractions of goods are possible.arrow_forwardA perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues: TC = $830,000 VC = $525,000 TR = $428,000 At that optimal level of output, what profit (loss) does the firm earn?arrow_forwardThe market for drones is perfectly competitive. Assume for simplicity that fractions of everything, including firms, is possible. We have identical firms, each with a Total Cost curve of TC=712+q^2 and Marginal Cost curve MC=2q. Market demand is Q=895-2P. What is the long-run equilibrium market price? Enter a number only, drop the $ sign.arrow_forward
- Derive theoretically and graphically the supply curve of an industry.arrow_forwardWill 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.arrow_forwardA profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?arrow_forward
- How to find the inverse demand equation faced by a perfectly competitive market?arrow_forwardThe 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.arrow_forwardA firm sells a product in a purely competitive market . The marginal cost of the product at the current output is $5.25 and the market is$5.90 . What should the firm do?arrow_forward
- why does price equal marginal revenue for the perfectly competitive firm? what is the relationship to the demand curve for the firm?arrow_forwardFruit market (a perfectly competitive market), the industry demand and supply of tomato (a homogenous product) is given by the following equations respectively: Qd = 50 − P Qs = 1 + 3P The typical firm’s total cost is given by the following equation: TC = 10 + 0.5Q2 + 5Q What is the profit maximizing level of output for the firm? How much profit is this firm earning? Show it graphically Is it short run or long run? Explain!arrow_forwardThe market for paperback detective novels is perfectly competitive. Market Supply is given by P=5+3Q. If the Marginal Cost of the last unit sold is $65, how many units are sold in the market? Enter a number only. Remember fractions of goods are possible.arrow_forward
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