please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly Figure 14-2Suppose a firm operating in a competitive market has the following cost curves:PRICE20MC18161412ATC106421 2 3 4 5 6 7QUANTITY8 910Refer to Figure 14-2. If the market price is $10, what is the firm's short-run economic profit?a. $9O b. $30c. $50Od. $15

If the market price is $10, the quantity that will produce at this price will be the quantity where…

Answered: Figure 14-2 Suppose a firm operating in…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
What is a price taker firm?
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?
Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.

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Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: PRICE 20 MC 18 16 14 12 ATC 10 6 42 1 2 3 4 5 6 7 QUANTITY 8 9 10 Refer to Figure 14-2. If the market price is $10, what is the firm's short-run economic profit? a. $9 O b. $30 c. $50 Od. $15