If a competitive firm can sell a bushel of soybeans for $25 and it has an...

If a competitive firm can sell a bushel of soybeans for $25 and it has an average variable cost of $24 per bushel and the marginal cost is $26 per bushel, the firm should:

increase the price

cut output to zero

reduce output

expand output

Solutions

Expert Solution

"A"

The firm should increase the price, a competitive firm in the market maximse the profit at the point where the price and marginal cost are the same. The answer is "A".

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel. His...

A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel. His five hectares of land show diminishing returns, because some are better suited for wheat production than others. The first hectare can produce 1000 bushels of wheat, the second hectare 900, the third 800, and so on. Fill in the table given below to answer the following questions. How many bushels will each of the farmer’s five hectares produce? How much revenue will each hectare...

We know that a firm in a competitive market can sell as much as it produces....

We know that a firm in a competitive market can sell as much as it produces. Does this mean a firm in a competitive market should produce as much as it can? Explain your answer. 7- We know that a monopolist can choose any price it likes. Does this mean that a monopolist should choose the highest price?

Draw a graph with the following information: The world price of soybeans is $2.00 per bushel...

Draw a graph with the following information: The world price of soybeans is $2.00 per bushel with a domestic supply of 60 Q/million bushels and a domestic demand of Q/millions bushels. The importing country is small enough not to affect the world price. A. Suppose government puts a tariff of $0.25 per bushel on soybean imports. How much will the tariff reduce imports? Draw the new graph. B. Given a tariff of $0.25 per bushel on soybean imports, how much...

Firm X, operating in a perfectly competitive market, can sell as much or as little as...

Firm X, operating in a perfectly competitive market, can sell as much or as little as it wants at the market price. The firm’s cost function is C(Q) = 600 + 8Q + 6Q 2 . a. At a market price of $140 per unit, what is the firm’s profit maximizing quantity? What is their profit? b. At a market price of $80 per unit, will the firm stay in business in the short-run? If so, what quantity would they...

Firm Z, operating in a perfectly competitive market, can sell as much or as little as...

Firm Z, operating in a perfectly competitive market, can sell as much or as little as it wants of a good at a price of $16 per unit. Its cost function is C = 50 + 4Q + 2Q2. (a) Determine the firm’s profit-maximizing level of output. Compute its profit. (b) The industry demand curve is QD = 200 - 5P. What is the total market demand at the current $16 price? If all firms in the industry have cost...

A profit-maximizing competitive firm has the production function ? = ?^.25?^.25 , where output ? is...

A profit-maximizing competitive firm has the production function ? = ?^.25?^.25 , where output ? is produced using capital (?) and labor (?). The price of labor is $2 and the price of capital is $6. The price of the firm’s output is $100. a. Write the firm’s profit function and calculate the first-order conditions. Provide an economic interpretation for each of the first-order conditions. b. Find the profit-maximizing quantities ?* and ?*. c. Find the firm’s total costs. d....

2. Assume the market for soybeans is perfectly competitive and in long-run equilibrium, and Norma’s Soybeans...

2. Assume the market for soybeans is perfectly competitive and in long-run equilibrium, and Norma’s Soybeans is a small farm in the market. Draw correctly labeled side-by-side graphs of both the market for soybeans and the firm, labeling the market equilibrium Pm and Qm and Norma’s Soybean equilibrium Pf and qf. Is Norma’s Soybeans earning economic profits, economic losses, or a normal profit? Now assume that in the soybean market there is a huge drought that ruins the soybean harvest...

Should a firm operating in a competitive market produce and sell their output if they incur...

Should a firm operating in a competitive market produce and sell their output if they incur a loss and not a profit? Why or why not? How does the answer depend on the size of the loss?

A profit-maximizing firm in a competitive market is able to sell its product for $9. At...

A profit-maximizing firm in a competitive market is able to sell its product for $9. At its current level of output, the firm's average total cost is $10. The firm's marginal cost is the same as its marginal revenue at its current output level of 20 units. The firm experiences a Select one: a. loss of more than $20. b. profit of more than $20. c. profit of exactly $20. d. loss of exactly $20.

Refer to the accompanying cost table. If a competitive firm faced with these costs finds that it can sell its product at $60 per unit, it will

Total Product Total Fixed Cost Total Variable Cost 0 $150 $ 0 1 150 50 2 150 75 3 150 105 4 150 145 5 150 200 6 150 270 7 150 360 8 150 475 9 150 620 10 150 800 Refer to the accompanying cost table. If a competitive firm faced with these costs finds that it can sell its product at $60 per unit, it will Multiple Choice- SHOW WORK produce 6 units and incur a loss...

Subjects