In pure competition, how do you determine the following: a. If the firm should shut down...

In pure competition, how do you determine the following:

a. If the firm should shut down in the short-run.

b. The level of output that a firm should produce.

c. Whether the firm is incurring losses or earning profits?

Expert Solution

A) In a perfect competition , firm should shut down basically when it is not able to afford it's variable cost . Or if average varibiable cost of the firm exceeds it's prices . Then Firm should shut down .

B) Firm should basically produce at a level where P = MC .

C) whether firm is occuring losses or earning can be simply be calculted by a profit formula i.e Total Revenue minus Total cost .

Rahul Sunny answered 2 years ago

A profit-maximizing firm in monopolistic competition should shut down in the short run if: a. price...

A profit-maximizing firm in monopolistic competition should shut down in the short run if: a. price is more than average total cost. b. price is less than average variable cost. c. marginal revenue is equal to marginal cost. d. marginal revenue is less than price. e. price is less than average fixed cost. The term “strategy” in terms of game theory refers to: a. the tendency for collusive firms to generate normal profits. b. each firm’s decision to charge a...

What is the rationale for a firm under perfect competition to shut down and to exit?...

What is the rationale for a firm under perfect competition to shut down and to exit? Please provide an example.

18. A firm should shut down in the short run if:

18. A firm should shut down in the short run if: a. price is greater than average variable costs b. average fixed costs are greater than marginal revenue c. price is less than average variable costs d. total costs are greater than fixed costs 19. A firm is said to be making profits when: a. marginal revenue exceeds marginal costs. b. marginal revenue exceeds variable costs. c. average revenue exceeds average total...

Should the firm shut down in the short-run? Explain in detail why or why not.

In the short run, under what conditions should the firm shut down? average total cost at...

In the short run, under what conditions should the firm shut down? average total cost at the minimum point price greater than average variable cost price less than average variable cost marginal revenue greater than marginal cost marginal revenue greater than average total cost

A profit-maximizing firm should shut down in the short run if: Answer choices: price is greater...

A profit-maximizing firm should shut down in the short run if: Answer choices: price is greater than marginal cost. total revenue is less than total variable cost. the firm is earning less than a normal rate of return. the firm is not able to cover its overhead expenses. marginal cost is higher than average cost.

In the short run, under what conditions should the firm shut down? a. average total cost...

In the short run, under what conditions should the firm shut down? a. average total cost at the minimum point b. price greater than average variable cost c. price less than average variable cost d. marginal revenue greater than marginal cost

How does a firm decide whether to shut down production in the short run and in...

How does a firm decide whether to shut down production in the short run and in the long run? Explain both scenarios Can a competitive firm earn positive profits in the long run? Explain.

Is pure competition a "desirable" market model for all industries? Should industries aspire for pure competition?...

Is pure competition a "desirable" market model for all industries? Should industries aspire for pure competition? Why or why not? Think of an industry that does not function in a purely competitive market currently. Describe the changes that would be required, if this industry wanted to function under pure competition.

•Is pure competition a "desirable" market model for all industries? Should industries aspire for pure competition?...

•Is pure competition a "desirable" market model for all industries? Should industries aspire for pure competition? Why or why not? •Think of an industry that does not function in a purely competitive market currently. Describe the changes that would be required, if this industry wanted to function under pure competition.

Question