Firms in the market for soccer balls are selling in a purely competitive market. A firm...

Firms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 1,000 balls, which it sells for $9 each. At the output level of 1,000, the average variable cost is $8, the average total cost is $11.00, and the marginal cost is $9.

1. What would you expect the firm to do in the short run? in the long run?

Expert Solution

Ans:

The firm will continue the production in the short run.

The firm will exit from the production in the long run.

Explanation:

Market price = $9

AVC = $8

ATC = $11.00

Total output = 1,000 balls

Total revenue = Price * Quantity = $9 * 1000 = $9000

Total cost = ATC * Quantity = $11.00 * 1000 = $11,000

Profit / Loss = Total revenue - Total cost = $9000 - $11,000 = - $2000 ( loss)

In the above scenario , the firm is making negative economic profit or loss . But the firm will continue its production becuase it is able to recover total variable costs and some parts of fixed costs . Here , P > AVC.

But in the long run , the loss making firm will exit from the market.

Rahul Sunny answered 2 years ago

The accompanying table gives cost data for a firm that is selling in a purely competitive market.

Total ProductAverage Fixed CostAverage Variable CostAverage Total CostMarginal Cost1$100.00$17.00$117.00$17250.0016.0066.0015333.3315.0048.3313425.0014.2539.2512520.0014.0034.0013616.6714.0030.6714714.2915.7130.0026812.5017.5030.0030911.1119.4430.55351010.0021.6031.6041119.0924.0033.0948128.3326.6735.0056The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $13, the competitive firm should produce

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $32, the competitive firm will produce

Total ProductAverage Fixed CostAverage Variable CostAverage Total CostMarginal Cost1$100.00$17.00$117.00$17250.0016.0066.0015333.3315.0048.3313425.0014.2539.2512520.0014.0034.0013616.6714.0030.6714714.2915.7130.0026812.5017.5030.0030911.1119.4430.55351010.0021.6031.6041119.0924.0033.0948128.3326.6735.0056The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $32, the competitive firm will produceA. 8 units at an economic profit of $16.B. 6 units at an economic profit of $7.98.C. 10 units at an economic profit of $4.D. 7 units at an economic profit of $41.50.The accompanying table gives cost data for a firm...

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $12, the competitive firm should produce

Total ProductAverage Fixed CostAverage Variable CostAverage Total CostMarginal Cost1$100.00$17.00$117.00$17250.0016.0066.0015333.3315.0048.3313425.0014.2539.2512520.0014.0034.0013616.6714.0030.6714714.2915.7130.0026812.5017.5030.0030911.1119.4430.55351010.0021.6031.6041119.0924.0033.0948128.3326.6735.0056The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $12, the competitive firm should produceMultiple Choice4 units at an economic profit of $31.75.4 units at a loss of $109.zero units at a loss of $100.8 units at a loss of $48.80.

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Total Product Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1 $150.00 $25.00 $175.00 $ 25.00 2 75.00 23.00 98.00 21.00 3 50.00 20.00 70.00 14.00 4 37.50 21.00 58.50 24.00 5 30.00 23.00 53.00 31.00 6 25.00 25.00 50.00 35.00 7 21.43 28.00 49.43 46.01 8 18.75 33.00 51.76 68.07 9 16.67 39.00 55.67 86.95 10 15.00 48.00 63.00 128.97 The accompanying table gives cost data for a firm that is selling in a purely competitive...

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