# In long-run equilibrium, the perfectly competitive firm's price is equal to which of the following: short-run marginal cost minimum short-run average total cost marginal revenue all the above I think that it is all the above related questions

• 1In long-run equilibrium, the perfectly competitive firm's price is equal to which of the following: short-run marginal cost minimum short-run average total cost marginal revenue all the above I think that it is all the above

In long-run equilibrium, the perfectly competitive firm's price is equal to which of the following: short-run marginal cost minimum short-run average total cost marginal revenue all the above I think that it is all the above. Am I correct?I too would go with all of the aboveThanks for the input.

• 2Given the following for perfectly competitive firm that has short-run cost structureOutput Marginal Cost1 \$102 \$53 \$124 \$235 \$40Total fixed costs are \$20 and the market price of the product is \$25 per unit

Given the following for perfectly competitive firm that has short-run cost structureOutput Marginal Cost1 \$102 \$53 \$124 \$235 \$40Total fixed costs are \$20 and the market price of the product is \$25 per unit. How much output should the profit-maximizing firm produce (if any) and how much profit or loss will the firm make in the short run?

• 3A monopolist is currently producing a level of output where Price = \$110; Marginal Revenue = \$10; Quantity = 100; Total Cost = \$15,000; Marginal Cost = \$10; Total Fixed Cost = \$4,000

A monopolist is currently producing a level of output where Price = \$110; Marginal Revenue = \$10; Quantity = 100; Total Cost = \$15,000; Marginal Cost = \$10; Total Fixed Cost = \$4,000. 1. To maximize profits in the short-run, the monopolist should: (a) Increase output (b) Decrease output (c) Produce the same output (d) Shut down (e) None of the above 2. To maximize profits in the long-run, the monopolist should: (a) Increase output and remain open (b) Decrease output and remain open (c) Produce the same output and remain open (d) Shut down (e) None of the above My answer: a) MR=MC so no need to change output and P>AVC (110>11) so don't shut down. Therefore, ;eave output the same. b) MR=MC so don't change output and P>ATC (110> 15) so don't shut down. Again. ;eave output te same. For part B, it says the answer is to shut down. Could someone pleeease help me. Thanks

• 4A monopolist is currently producing a level of output where Price = \$110; Marginal Revenue = \$10; Quantity = 100; Total Cost = \$15,000; Marginal Cost = \$10; Total Fixed Cost = \$4,000

A monopolist is currently producing a level of output where Price = \$110; Marginal Revenue = \$10; Quantity = 100; Total Cost = \$15,000; Marginal Cost = \$10; Total Fixed Cost = \$4,000. 1. To maximize profits in the short-run, the monopolist should:(a) Increase output(b) Decrease output(c) Produce the same output(d) Shut down(e) None of the above2. To maximize profits in the long-run, the monopolist should:(a) Increase output and remain open(b) Decrease output and remain open(c) Produce the same output and remain open(d) Shut down(e) None of the aboveMy answer:a)MR=MC so no need to change output and P>AVC (110>11) so don't shut down. Therefore, ;eave output the same.b)MR=MC so don't change output and P>ATC (110> 15) so don't shut down. Again. ;eave output te same. For part B, it says the answer is to shut down. Could someone pleeease help me. Thanks

• 5if production displays economies of scale, the long run average cost curve is:a) upward slopingb) above the short run average total cost curveC0 below the long run marginal cost curved) downward sloping

if production displays economies of scale, the long run average cost curve is:a) upward slopingb) above the short run average total cost curveC0 below the long run marginal cost curved) downward sloping

• 6Assume that the graph illustrates the marginal, average variable and average total cost curves of a typical soybean grower and that the wholesale market for soy beans is a perfectly competitive market

Assume that the graph illustrates the marginal, average variable and average total cost curves of a typical soybean grower and that the wholesale market for soy beans is a perfectly competitive market.1) As output expands, at what level of output does this grower first start to experience diminishing marginal productivity of labor?2) Assume that the current market price at the wholesale level is \$5 per pound. How much soybean will this typical grower produce?3) Is there a price below which the grower will not bother to cultivate & harvest his crop, but will just let the beans rot on the tree?4) Assume that as the industry expands (or contracts) the prices of the variable inputs it uses do not change. Is \$5 per pound the long run equilibrium price in this market? If so, explain why. If not, explain why not and identify the long run equilibrium price.5) Suppose there is a shortage of experienced farm labor in the soybean growing regions, so that as the industry expands the wages paid to farm labor rise. How would this affect your conclusion in part (4) about the long run equilibrium price of soybean?6) Suppose that technological innovation in soybean cultivation greatly reduced the amount of labor used per ton of beans harvested but required farmers to invest in substantially more large scale capital equipment and computerized hydration management systems.Draw a diagram illustrating the effect on the typical grower's average total cost curve. (i.e. draw a "before" and "after" ATC schedule). What is the effect of this technological change on the minimum efficient scale of production?----*****Graph: tinypic . com/r/11m7urb/5thanks

• 7Average Cost and Marginal Cost curves short Run

A firm in a perfectly competitive industry is making losses in the short run.(i) Sketch a ‘typical’ firm’s Average Cost and Marginal Cost curves and in the diagram show a possible price at which the firm would produce in theshort run, but make losses. [Hint: how does the price compare with the firm’s averagevariable cost?](ii) Now explain what will happen in the industry as a whole in response to the losses that firmsare experiencing. How does the market price change and what happens to profits?

• 8suppose a competitive market consists of identical firms with a constant long run marginal cost of \$10

suppose a competitive market consists of identical firms with a constant long run marginal cost of \$10. Suppose the demand curve is given by q=1000-pa)What are the price and quantity consumed in the long run competitive equilibrium?b)Suppose one new firm enters that is different from the existing firms. The new firm has a constant marginal cost of \$9 and no fixed costs but can only produce 10 units (or fewer). What are the price and quantity consumed in the long run competitive market?************************************Consider a competitive industry with several firms all of which have the same cost function, c(y) = y2 + 4 for y > 0 and c(0) = 0. The demand curve for this industry is D(p) = 50 - p, where p is the price. a.Suppose that there are 10 firms in the industry, what is the equilibrium market price?b.What is the profit for each firm?c.What is the long-run equilibrium number of firms in this industry **********************************If the demand curve is , what is the elasticity of demand? What is total revenue when p=1 and when p=30? If production costs \$1 per unit, and the smallest production level is 1 unit, how much should the monopolist produce?**********************************A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 30 - y and its total costs are c(y) = 5y, Calculate the equilibrium price, output, monopoly profits and mark up. What would the equilibrium be if the market were supplied competitively by firms and each individual firm had the same costs?

• 9Suppose a market with two sellersSeller 1 has a marginal cost of c1=20q1 and seller 2 has a marginal cost of c2=40q2Find the market supply curve in a competitive market where the price = c1= c2

Suppose a market with two sellersSeller 1 has a marginal cost of c1=20q1 and seller 2 has a marginal cost of c2=40q2Find the market supply curve in a competitive market where the price = c1= c2

• 10According to the rule for optimal input usage, a firm should hire a person as long as his or her marginal revenue product is greater than his or her marginal cost to the company

According to the rule for optimal input usage, a firm should hire a person as long as his or her marginal revenue product is greater than his or her marginal cost to the company. It is well known that many companies have management training programs in which new trainees are paid relatively high starting salaries and are not expected to make substantial contributions to the company until after the program is over (programs may run between 6 to 18 months). In offering such training programs, is a company violating the optimality rule? Explain

• 11Two price setting firms have the same price and marginal revenue functions but face different cost functions

Two price setting firms have the same price and marginal revenue functions but face different cost functions. These functions are provided below.P = 165 - 0.025QMR = 165 - 0.05QFirm 1: TC = 4,000 + 15Q Firm 2: TC = 3,000 + 22Q a. Assuming that both firms are profit-maximizers, compute the output that each firm should produce.b. Compute the price that each firm should charge at their respective output levels you computed above.c. Compute the economic profit or loss of each firm at their respective output levels.d. Suppose these firms operate in monopolistically competitive market. What will happen to economic profit or loss in the long run? Please briefly explain your answer.

• 12The handmade snuffbox industry is composed of 100 identical firms, each having short – run total costs given by STC = 0.5q2 + 10q + 5 and short – run marginal costs by SMC = q + 10 where q is the output of snuffboxes per day

The handmade snuffbox industry is composed of 100 identical firms, each having short – run total costs given by STC = 0.5q2 + 10q + 5 and short – run marginal costs by SMC = q + 10 where q is the output of snuffboxes per day.a) What is the short –run supply curve for each snuffbox maker? What is the short – run supply curve for the market as a whole?b) Suppose the demand for total snuffbox production is given by Q = 1,100 – 50P. What will be the equilibrium in this marketplace? What will each firm’s total short – run profits be?c) Graph the market equilibrium and compute total short – run producer surplus in this case.d) Show that the total producer surplus you calculated in part c is equal to industry profits plus industry short – run total fixed costs.e) Suppose the government imposed a 3\$ tax on snuffboxes in the industry described above. i) How would this tax change the market equilibrium.ii) How would the burden of this tax be shared between snuffbox buyers and sellers?iii) Calculate the total loss of producer surplus as a result of the taxation of snuffboxes. Show that this loss equals the change in total short – run profits in the snuffbox industry. Why do not fixed costs enter into computation of the change in the short-run producer surplus?