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Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the
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- The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomacs closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $450. Potomac noticed that its sales volume declined to 4,500 units per month after Spring City announced its price cut. What is the arc cross elasticity of demand between Potomacs oven and the competitive Spring City model? Would you say that these two firms are very dose competitors? What other factors could have influenced the observed relationship? If Potomac knows that the arc price elasticity of demand for its ovens is 3.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?Exhibit 23-9 Price a Market O $ Price and Cost 02 Single Firm SRATC MC LRATC d 0 Quantity Quality Refer to Exhibit 23-9. Following an increase in market demand from D₁ to D₂, the firm's profits in the short run will remain the same at P₁ times q1- remain the same at zero. increase by less than (P₂ - P₁) times 92. increase by (P₂ - P₁) times q3.Revenue and cost (dollars per unit) MC AVC 50 40 30 10 10 30 40 50 Output (units per day) The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss) the firm should A) produce 30 units. B) shut down. C) produce 40 units. D) produce between 10 and less than 30 units. E) produce more than 30 units and less than 40 units. 20 20
- Kyrie owns a company in a competitive market that generates $800 in total revenue and has a marginal revenue of $20. If Kyrie is maximizing profit what quantity of goods are being sold and at what price? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 20 units are being sold at a price of $40. b 20 units are being sold at a price of $20. 40 units are being sold at a price of $80. d. 40 units are being sold at a price of $20. e 80 units are being sold at a price of $20. f 80 units are being sold at a price of $40.Kyrie owns a company in a competitive market that generates $800 in total revenue and has a marginal revenue of $20. If Kyrie is maximizing profit what quantity of goods are being sold and at what price? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 20 units are being sold at a price of $40. b 20 units are being sold at a price of $20. 40 units are being sold at a price of $80. d 40 units are being sold at a price of $20. 80 units are being sold at a price of $20. e 80 units are being sold at a price of $40.ume the pizza market is a perfectly competitive constant cost industry, and all firms have identical homogenous firms). The market demand and market supply functions for this perfectly competit stry are given below. L 0 1 2 3 4 5 6 7 8 9 q=TP 0 10 20 30 40 50 60 70 80 90 TC 100 205 2.45 280 340 430 545 720 930 1190 P = 30.5-.005Q P = 1.7+.003Q TFC TVC 100 0 100 105 20.50 10.50 100 145 12.25 7.25 100 180 9.33 6.00 100 240 8.50 6.00 100 330 8.60 6.60 100 445 9.08 7.42 100 620 10.29 8.86 100 830 11.63 10.38 100 1090 13.22 12.11 ATC AVC MC 10.50 4.60 3.50 6.00 9.00 11.5 17.50 21.00 26.00
- an A seller in a perfectly competitive market can increase his profit in the short run by: Increasmg his selling price above the market price Decreasing his selling price so he sells more output Conducting an effective advertising campaign for his product d None of the aboveKasey Puzzle, Inc. sells geography-based puzzles. Kasey currently sells 25,000 units a month for $40 each, has variable costs of $20 per unit, and fixed costs of $300,000. Kasey Puzzle is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Kasey Puzzle increase the price of its product? с Multiple Choice O O Yes, profit will increase $500,000. No, profit will decrease $500,000. No, profit will decrease $300,000. Yes; profit will increase $300,000.A firm in a competitive market receives $500 in total revenue and has marginal revenue of $10. What is the average revenue, and how many units were sold? Microeconomics - Mankiw
- 3n A sellet in a perfectly competitive market can increase his profit in the short run by: Increasing his selling price above the market price 6 Docreasing his selling price so he sells more output Conducting an effective advertising campaign for his product PNone of the aboveSuppose that Redeye's Game Emporium is in a market with imperfect competition. The graph below shows the firm's demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. Determine the profit-maximizing level of output and the associated profit-maximizing price. Use the purple rectangle (diamond symbols) to shade the area that represents the firm's profit at this quantity. 2 2 2 2 2 2 2 2 2 2 - PRICE (Dofars per video game) 200 100 100 140 120 100 40 20 20 40 MR 1 88 60 10 100 120 140 160 180 200 QUANTITY (Thousands of Video games) D Profit Which of the following statements is correct at the point where the firm's average total cost (ATC) and the demand curve intersect?f the firm is producing at a quantity where marginal revenue exceeds marginal cost then, in order to increase profit, ___ Question 17 options: the firm's perceived demand will shift to the left. the firm should keep expanding production. any additional unit produced would decrease profit. the firm is now earning zero profit.