b. Assuming a cookie firm was in equilibrium before the change in demand, and it is a constant-cost industry, demonstrate the effect of the decline on equilibrium price for an individual cookie firm in the short run. Instructions: Using the following graph, use the tool 'MR' to draw the new marginal revenue curve facing the firm between Q=0 and Q=1,000. Then use the 4-point tool 'A' to identify the firm's profit or loss. Price Your Graph Score: 0% 10 9 8 7 4 3 1 0 MR Cookie Firm MC ATC MR 100 200 300 400 500 600 700 800 900 1000 Quantity

b. Assuming a cookie firm was in equilibrium before the change in demand, and it is a constant-cost industry, demonstrate the effect of the decline on equilibrium price for an individual cookie firm in the short run. Instructions: Using the following graph, use the tool 'MR' to draw the new marginal revenue curve facing the firm between Q=0 and Q=1,000. Then use the 4-point tool 'A' to identify the firm's profit or loss. Price Your Graph Score: 0% 10 9 8 7 4 3 1 0 MR Cookie Firm MC ATC MR 100 200 300 400 500 600 700 800 900 1000 Quantity

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 13P

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Similar questions

Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Attempts 0 2. Calculating marginal revenue from a linear demand curve The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 160 140 120 100 A Demand 40 12 PRICE (Dollars per unit) 200 Keep the Highest 0/5 180 20 0 0 4 16 20 24 28 32 36 40 QUANTITY (Units) Graph Input Tool Market for Goods I Quanded (Units) Demand Price (Dollars per unit) 20 100.00 (?
Suppose Jake runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Jake's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Jake produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 25 -25 1 2 6 8 QUANTITY (Frying pans) Calculate Jake's marginal revenue and marginal cost for the first seven frying pans he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. (? 40 35 Marginal Revenue 30 25 Marginal Cost 20 15 1 2 3 4 5 6. QUANTITY (Frying pans) Jake's profit is maximized when he produces frying pans. When he does this, the marginal cost of the last frying pan he…
Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 130 120 110 100 90 80 70 60 40 20 10 15 30 45 75 MC D 60 90 105 201355 $150¹65180195 Quantity per period (in thousands) Tools
3. Profit maximization using total cost and total revenue curves Suppose Ana runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the market price is $20 per shirt. The following graph shows Ana's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Ana produces, including zero shirts. TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars) Total Revenue A 125 100 Total Cost ☐ Profit 200 175 150 75 50 ༔་ཎྜ་ ྴ་སྐྱ ིི་ཐྭ་8་མ་° 1 2 3 4 5 6 7 8 QUANTITY OF OUTPUT (Shirts) (?) Calculate Ana's marginal revenue and marginal cost for the first seven shirts she produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. Note: Be sure to plot marginal values between the appropriate whole unit values. For instance, plot…
J 8. Short-run and long-run effects of a shift in demand Suppose that the tempeh industry is initially operating in long-run equilibrium at a price level of $5 per pound of tempeh and quantity of 250 million pounds per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as tempeh could increase your expected lifespan by 6 years. The publication is expected to cause consumers to demand Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication. PRICE (Dollars per pound) 10 9 8 7 9 5 4 3 2 1 0 0 50 100 Supply In the long run, some firms will respond by Demand 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) tempeh at every price. In the short run, firms will respond by Demand Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after…
1) Briefly explain how the total revenue for a profit-seeking film is determined 2)Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs? 3)Contrast the rold of fixed costs and variable costs in economic decisions about future prodiction 4)Briefly compare and contrast the perceived demand curve for a monopolitically competitive firm and a perfectly competitive firm. 5)Briefly explain what quantity a profit maximizing monopolistic competitor will seek. Why not this type of competitive frim is productively efficient?
Q23 Suppose a perfectly competitive firm is currently operating with the following information: Output = 1500 tonnesAverage total cost = $627 per tonneAverage variable cost = $614 per tonneMarginal revenue = $620 per tonneMarginal cost = $620 per tonneAt the current level of output, this firm is _____ profit and is an earning economic profit of _____. a. Maximising; -$10500. b. Not maximising; -$10500. c. Maximising; $10500. d. Maximising; $9000. e. Not maximising; -$9000.
1. Below is a demand schedule facing an individual firm. Complete the table by computing average revenue, total revenue, and marginal revenue. Then answer the following two questions: (a) How can you tell whether a firm is operating in a market that is perfectly competitive? (b) What relationship exists between average revenue and marginal revenue? Price $30 30 30 30 30 30 30 Quantity Average demanded revenue олдWN -о 1 2 3 4 5 6 $ Total Marginal revenue revenue $ $
1. The following table has information on the revenues and costs for Tom's tennis ball manufacturing which operates in a perfecetly competitive market. a) Complete the table that corresponds to Tom's production when price is $3. What is MR? b) What is Tom's profit maximization output? What is the shutdown price, entry and exit price? c) What is the economic profit or loss? No of baseballs Total Variable Costs Total Fixed Total Cost $ Cost $ 1.00 2.00 4,00 2. 7.00 4. 11.00 16.00
3. The components of marginal revenue Asim's HockNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced seven trucks, but then decided to increase production to eight trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $100,000 to $50,000 per truck. Notice that Asim gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial seven engines because they are all sold at the lower price. use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 250 221 200 179 150 125…
Suppose a firm in a competitive industry has the following cost curves: 10 4.5 3.5 9+ 8 7 6 3 ↑Price 2 1 2 3 4 5 MC ATC AVC + + 6 7 8 Quantity Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run? a. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. b. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. C. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry. d. Because the price is below the firm's average variable costs, the firms will shut down.