In pure competition, if the market price of the product is higher than the minimum average total cost of the firms, then Multiple Choice some firms will exit the industry and the industry supply will decrease. other firms will enter the industry and the industry supply will increase. some firms will exit the industry and the industry supply will increase. other firms will enter the industry and the industry supply will decrease.
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- What is the correct answer? In pure competition, if the market price of the product is lower than the minimum average total cost of the firms, then A. some firms will enter the industry and the industry supply will increase B. other firms will exit the industry and the industry supply will decrease C. some firms will exit the industry and the industry supply will increase D. other firms will enter the industry and the industry supply will decreaseGoods sold in a perfectly competitive market are quite differentiated. True/FalseIn the long run, when there are economic losses, firms leave the industry, which will decrease the market supply and increase the price until economic losses are zero. True False
- The following table displays the average cost of producing a good at different levels of output in the long run. Output (units) Average Cost ($) 940 190 980 140 1,020 120 1,060 110 1,100 110 1,140 125 1,180 145 if all the firms in the market have the same LRAC curve, what is the minimum level of output needed for a low-cost firm to compete in the market? Write the exact answer. Do not round.If the market for donuts is perfectly competitive and all firms are producing a quantity that generates no deadweight loss and the cost per unit is minimized, which of the following is most likely true? Firms are making economic losses and more firms will exit this industry. Firms are earning economic profits and more firms will enter this industry. Firms will decrease their average total costs if they increase output The market is in long-run equilibrium.Below is the demand schedule for wholesale pallets of ice cream. Assume that the marginal cost of supplying a wholesale pallet of ice cream is a flat $40 per pallet. Price Quantity Total Revenue Total Cost Profit $100 40 $90 50 $80 60 $70 70 $60 80 $50 90 $40 100 First, complete the table above for TR, TC, and profit. If this were a competitive industry, where P=MC, what would be the price and quantity of wholesale ice cream? If ice cream were supplied instead by a profit-maximizing monopoly, what would be the price and quantity? If Ben and Jerry were to form a collusive duopoly for the production of ice cream, what would be the price and industry quantity? If Ben and Jerry split the market in d. evenly, what would be the output and profit for each of them? What if Ben were to cheat on the cartel and produce a higher output by 10 pallets: What is Ben’s resulting output…
- The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. Price Cost MC ATC A 4 2 1 D 2 4 6 8 10 12 Quantity Quantity Refer to the figure above. Suppose that the market has reached the long-run equilibrium. Then, due to news of the product's defects and recall, the demand falls by 4 units at each price. At the new equilibrium, each firm in the market earns and there will be a. zero economic profit; neither entry nor exit of firms b. positive economic profit; entries of new firms C. zero accounting profit; both entry and exit of firms d. negative economic profit; exit of existing firmsWhich of the following is a reason why firms in a perfectly competitive market have no influence over price? Barriers exist to enter the market. All firms in the market sell identical products. There are many sellers that produce similar, but not identical, products. Buyers and sellers lack perfect information about the product and pricing.What determines the extent of competition in a market? How much the price decreases as more firms enter the market How costly it is for a new firm to enter the market The share of market sales each firm provides All of the above
- Three firms are producing a good and are competing in prices: consumers buy from the firm that has the lowest price, and each firm on its own can satisfy the entire market. If more than one firm choose the same price the demand is divided equally among them. There are no other firms in the market. Two firms have the same constant marginal cost cL and the third one has a higher marginal cost cH : cL < cH . Explain what will be the equilibrium price in this market.Rebecca owns Louisiana Sugar Company, a manufacturer of sugar. Since there are lots of domestic manufacturers and importers of sugar and it is difficult to practice brand differentiation, the sugar industry is highly competitive. Suppose the demand for sugar increases. (1) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why. (2) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why.Suppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories. what quantity and price maximize your firms profit? What is the profit – maximizing number of brakes produced in the U.S. plant? In the U.K. plant? Quantity Demanded (brakes per hour) Price (dollars per brake) Quantity Produced in the U.K. plant (brakes per hour) Quantity Produced in the U.S. (brakes per hour) Total Quantity Produced Marginal Cost (dollars per brake) Marginal Revenue (dollars per brake) 104 196 47 42 89 66 92 105 195 48 44 92 68 90 106 194 49 46 95 70 88 107 193 50 48 98 72 86 108 192 51 50 101 74 84 109 191 52 52 104…