5 QUESTION 18Consider the following setup for a perfectly competitive market: Suppose that for the firm, TC = 400+ Q², and MC=2Q. For the corresponding market, suppose11that demand is given by P=200- Q and supply is given by P=— ∙Q.Given the firm's profits, is this situation sustainable in the long run? That is, will firms have an incentive to enter or leave the market?Not sustainable, firms will enter the market.Not sustainable, firms will leave the market.Sustainable, firms will neither enter or leave the market.Cannot be determined.

If a perfectly competitive firm earns profit in the short run, then new firms have the incentive to…

Consider the following setup for a perfectly competitive market: Suppose that for the firm, TC = 400+ Q², and MC =2Q. For the corresponding market, suppose 1 that demand is given by P=200- Q and supply is given by P=- 2 1 ==e. 2

Consider the following setup for a perfectly competitive market: Suppose that for the firm, TC = 400+ Q², and MC =2Q. For the corresponding market, suppose 1 that demand is given by P=200- Q and supply is given by P=- 2 1 ==e. 2

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter24: Perfect Competition

Section: Chapter Questions

Problem 7E

See similar textbooks

Related questions

Q: a new entrant, then the number of boats that enter will be B₁. If the number of boats that operate…

A: Profits, in economics are defined as the excess revenue over the total cost . Total cost comprises…

Q: Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit…

A: The loss of not being able to manufacture units of other commodities due to resources used in the…

Q: The present worth of the full-sized pipeline is determined to be what and that of the small-sized…

A: An economical pipeline is one that has the lowest overall cost over its useful life, taking into…

Q: a) What is the price elasticity of demand for hamburger buns? Please provide a numerical answer. If…

A: Price elasticity refers to the degree to which the quantity demanded of a product changes in…

Q: When more and more people join the labour force, the productivity growth increases. True False

A: The labor force refers to the number of people who are currently hired or actively looking for…

Q: ws?" the ticket owner explained. "We might not even be here in 20 years, and I do not want to leave…

A: The time value of money is used in the present value calculation to discount future cash flows and…

Q: Identify the macro equilibrium. Instructions: Use the tool provided 'QE' to identify the current…

A: DISCLAIMER “Since you have asked multiple question, we will solve the first three question for you.…

Q: a. What outcomes, if any, are Nash equilibria? b. If the managers of both firms are conservative and…

A: Nash equilibrium occurs when each player in the game chooses their optimal strategy given the…

Q: Refer to the information provided in Table 21.6 below to answer the question(s) that follow. Table…

A: Gross private domestic investment (GPDI) is defined as the measure of physical investment that is…

Q: (g) If there are increasing returns to scale and pecuniary diseconomies, then the slope of the long…

A: The firm theory, in microeconomics, refers to the neoclassical concept that every firm functions in…

Q: Home Furniture paid $65 for a lamp. Expenses are 14% of selling price and the required profit is 21%…

A: home furniture paid $65 for a lamp Expenses = 14% of the selling price Profit = 21% of the selling…

Q: Draw the Market demand curve for sunglasses.

A: The maximum willingness to pay is the maximum price that the consumer is willing to pay for each…

Q: 10. A firm produces output according to the production function Q = F(K, L) = 4K +8L. a. How much…

A: Given The production function is given as follows: Here K denotes units of capital and L denotes…

Q: Suppose that you are considering whether to enroll in a summer computer-training program that costs…

A: Present value is a concept that meqns to the value of a future payment or stream of payments in…

Q: Increasing the wage rate will cause people to work more. O Uncertain O True

A: Supply of labor is back bending that means increase in wage initially increases workers supplied but…

Q: How does money illusion cause nominal wage rigidity? O a. Wages fall only when money illusion is…

A: Money illusion can cause nominal wage rigidity by making it difficult for nominal wages to adjust to…

Q: At Mcdonald, as the price of grilled chicken salad increases from $4 to $6 while the quantity…

A: Given: The price of grilled chicken salad increases from $4 to $6 The quantity demanded for Big Mac…

Q: The downward inflexibility of money wage rates is called: Price Floor Price Ceiling…

A: Recession leads to downward inflexibility of money wage rates as per Keynesian view. This implies…

Q: 11.Monetary is regard BOP as approach to adjust the difference between money supply and demand.…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Quantities Produced 225 220 215 210 205 200 195 190 185 180 175 170 165 160 155 150 145 140 135 130…

A: Total product is defined as the total quantity of goods produced by a firm during a given period of…

Q: IE 5545 VCG Mechanism Vickrey-Clarke Groves (VCG) mechanism. Four roommates are considering the…

A: VCG (Vickrey-Clarke-Groves) is a mechanism used in mechanism design, which is a field in economics…

Q: 3. Two stores are located side by side. They attract customers to each other and to themselves by…

A: Nash equilibrium is a concept in game theory where players, knowing each other's strategies, choose…

Q: Help from the department of labor matching workers to jobs will [ Select ] ["extend",…

A: Unemployment is when an individual who is not employed and is seeking employment, cannot find work.…

Q: A harvester was purchased 4 years ago for $100,000. The current market value is $45,000, which will…

A: According to the above problem, the machine was purchased 4 years back at 100,000. It is sunk cost…

Q: According to Martin Gilens, which of the following best explains why most Americans are in favor of…

A: Welfare refers to a government software or social support system designed to provide assistance and…

Q: In a private closed economy, the equilibrium condition for the economy is Multiple Choice O O…

A: Gross Domestic Product ( GDP) refers to the final value of all goods and services produced in an…

Q: To Vote or Not to Vote Mr. and Mrs. Ward typically vote oppositely in elections and so their votes…

A: Game theory is concerned with the choice of an optimal strategy in conflict situations. In an…

Q: Using the quantity of 400, how much profit or loss will they earn?

A: Demand curve is the downward sloping curve. The firm will produce where the marginal cost is equal…

Q: T/F Scarcity of resources arises only in poor countries.

A: Scarcity is a essential economic idea that refers to the limited availability of assets, goods, and…

Q: If the market price is 12, will the firm produce more than 120, exactly 120 or less than 120 units?…

A: The firm maximizes profit by producing at a point where price is equal to marginal cost.

Q: Complete the first row of the table with the quantity of lobster rolls that can be bought with $500.…

A: Government spending in the economy develops a money supply that boosts the demand of the economy.…

Q: Enrollment in the Medicaid program is designed for those persons 65 years of age and older. has…

A: Medicaid is a joint federal and kingdom program that offers health insurance coverage for eligible…

Q: How much can Sheila borrow on a credit card charging an APR of 17% over a period of 5 years if she…

A: APR, which stands for Annual Percentage Rate, is a composite of various charges and interest you…

Q: On the legend in the following map, identify the following symbols: International airports;…

A: International airports are airports that have the infrastructure and facilities to handle…

Q: K Jane is interested in buying a car from a used car dealer. Her maximum willingness to pay for the…

A: Nash equilibrium is the point of a game corresponding to which each participant optimizes his…

Q: The government passes a new law that allows businesses to receive wage subsidies, then: Supply…

A: Wage subsidies to business is the amount given to businesses for hiring workers.

Q: What else can explain why many firms over invest in advertising? Are there are any reasons for firms…

A: Over-investment in advertising results when a company spends more money on advertising than is…

Q: Answer is complete but not entirely correct. Suppose the economy is at full employment when AS =…

A: Aggregate demand is the sum of consumption, investment, government spending and net export. Short…

Q: 2. How does advertising impact monopolistically competitive firms? A. It causes a firms…

A: Monopolistic competition is a market structure in which many firms compete with each other by…

Q: Use the information in Table 1 to complete the chart. Enter the price in dollars of the meal in…

A: Exchange rate is the measure of relative price of one country with respect to another country's…

Q: You are an advisor to the Prime Minister of your country. Currently, post-secondary students in your…

A: Subsidies refers to financial assistance provided by the government to reduce the cost of something.…

Q: Consider a competitive industry with a large number of firms, all of which have identical cost…

A: There is a large number of firms in a competitive industry. Each firm have identical cost function…

Q: In order to remain solvent and continue to support Americans, what are the goals of the Social…

A: The Social security administration (SSA) is a U.S. authorities agency that administers the Social…

Q: How expensive public transport is impact on people with low salary ? Graph it.

A: Public transportation refers to the shared transportation services that are available to the general…

Q: n a closed shop, the company can only employ members of the union, so prospective employees must be…

A: A union refers to an organized group of workers, usually in a specific industry or profession, who…

Q: How many barrels can the first period consume before any User Cost occurs?

A: User cost is the cost that is paid by the user in period 1 due to greater consumption than the…

Q: The following graph shows Crest's demand curve, marginal-revenue (MR) curve, average-total-cost…

A: Total revenue is the total value of the commodities produced and sold in equilibrium. Economic costs…

Q: 31. Consider the following figure that shows the demand and the cost curves of a perfectly…

A: The perfectly competitive market refers to the market where large number of buyer and sellers are…

Q: Under a two identical country case, graphically illustrate and discuss the welfare implications to…

A: Trade distortion refers to any government action that alters the free flow of goods and services…

Q: 9-15. A small high-speed commercial centrifuge has the following net cash flows and abandonment…

A: Rate of return=10% Current market value=$7,500 To determine:- Optimal time to abandon=?

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction:

VIEW

Step 2: Calculation of market equilibrium price.

VIEW

Step 3: Calculation of an individual firm profit or loss.

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 100 80 Profit or Loss 70 ATC 60 50 40 20 AVC 20 MC 10 10 12 QUANT TY Thousands of pans per dey 140 45 32 PRICE (Dollars per pan) 品导

Profit is the incentive that drives our market economy. Firms make production, pricing, andhiring decisions based on their quest for profit. But what happens when a firm discoversthat it can make dramatically higher profits by stopping production altogether? In December2000, due to wild swings in the market for electricity, Kaiser Aluminium faced just such adecision.Kaiser Aluminium had contracted with Bonneville power for all of its electricity needs andfound itself in the unique position of being an electricity consumer and, potentially, anelectricity reseller. By December 2000, Kaiser faced a difficult decision of continuing itscurrent aluminium production and profit levels, or closing the plant to dramatically increaseits profit by simply reselling its electricity.When making production decisions, firms must consider both their costs and revenues. Oneimportant concern for many firms is utility costs. In 1996, Kaiser Aluminium Corporation inSpokane, Washington, entered into a…
Profit is the incentive that drives our market economy. Firms make production, pricing, andhiring decisions based on their quest for profit. But what happens when a firm discoversthat it can make dramatically higher profits by stopping production altogether? In December2000, due to wild swings in the market for electricity, Kaiser Aluminium faced just such adecision.Kaiser Aluminium had contracted with Bonneville power for all of its electricity needs andfound itself in the unique position of being an electricity consumer and, potentially, anelectricity reseller. By December 2000, Kaiser faced a difficult decision of continuing itscurrent aluminium production and profit levels, or closing the plant to dramatically increaseits profit by simply reselling its electricity.When making production decisions, firms must consider both their costs and revenues. Oneimportant concern for many firms is utility costs. In 1996, Kaiser Aluminium Corporation inSpokane, Washington, entered into a…
Profit is the incentive that drives our market economy. Firms make production, pricing, andhiring decisions based on their quest for profit. But what happens when a firm discoversthat it can make dramatically higher profits by stopping production altogether? In December2000, due to wild swings in the market for electricity, Kaiser Aluminium faced just such adecision.Kaiser Aluminium had contracted with Bonneville power for all of its electricity needs andfound itself in the unique position of being an electricity consumer and, potentially, anelectricity reseller. By December 2000, Kaiser faced a difficult decision of continuing itscurrent aluminium production and profit levels, or closing the plant to dramatically increaseits profit by simply reselling its electricity.When making production decisions, firms must consider both their costs and revenues. Oneimportant concern for many firms is utility costs. In 1996, Kaiser Aluminium Corporation inSpokane, Washington, entered into a…
Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. V AVC COSTS (Dollars per ton) 100 882 889 80 20 0 MC 5 25 30 35 QUANTITY (Thousands of tons) 15 20 10 45 40 50 The following diagram shows the market demand for steel.
You witnessed new firms entering a competitive market. What can you infer for the existing firms in that market?
20 10 MO 0 10 MR Demand 20 30 40 10 00 70 QUANTITY (Thousands of jackets) 00 100 Because this market is a price-searcher market, you can tell that it is in long-run equilibrium by the fact that Furthermore, the quantity the firm produces in long-run equilibrium is s the efficient scale. P> ATC MR MC PATC MR > MC at the optimal quantity,
If this is the case of a typical firm in a perfectly competitive market, what is most likely to happen?
Answer please it's urgent 1) What are the characteristic that a firm faces in a perfectly competitive market? 2) What methods would they employ to maximize profits?
18 IV 16 14 II 12 A P1=MR1 10 8. B Po=MRo 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do? O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits. O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which will Cost 41
When is it the right time when a firm will enter a competitive market?
Use the graphs below to answer the following questions. $lb $/gal 25 25 MC ATC 20 20 15 p1 15 10 10 P2 D 2 4 6. 8 10 1 3 4 5 Millions of gal/week Thousands of gal/week What is the long-run equilibrium price in this market? Please enter your answers as whole numbers with no decimal places (ie. 5 or $5 not 5.00 or "Five dollars"). How many gallons per week will the individual firm produce to maximize profits in equilibrium? Please enter your answers as whole numbers with extra words (ie. 5000 not "5000 gallons/week" or "Five thousand" ). What is the individual firm's long run economic profit?