At its current level of production a profit-maximizing firm in a competitive market receives $11.50 for...

At its current level of production a profit-maximizing firm in a competitive market receives $11.50 for each unit it produces and faces an average total cost of $9.00. At the market price of $11.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 800 units. What is the firm's current profit? What is likely to occur in this market and why?

Expert Solution

P= $11.50

ATC = $9

MR=MC at Q=800 units.

So, the firm's current profit = (TR-TC)Q = (P)(Q)- (ATC)(Q)

= (11.50)(800)- (9)(800)

= 9200 - 7200

= $2000

Because firm is earning positive profit (P>ATC) , so firms enter into the market in the long run. As a result , supply increases till when P=minimum ATC.

Rahul Sunny answered 2 years ago

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for...

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm's current profit? What is likely to occur in this market and why?

At its current level of production a profit-maximizing firm in a competitive market receives $10 for...

At its current level of production a profit-maximizing firm in a competitive market receives $10 for each unit it produces and faces an average total cost of $12.50. At the market price of $10 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm's current profit? What is likely to occur in this market and why? Please explain.

At its current level of production, a firm in a perfectly competitive market receives $15 for...

At its current level of production, a firm in a perfectly competitive market receives $15 for each unit it produces. The firm also faces an average total cost of $9. At the market price of $15 per unit, the firm’s profit-maximizing quantity is 800. What are the firm’s current profits? What is likely to occur in this market? Why?

At its current level of production, a firm selling sunglasses in a competitive market receives $10...

At its current level of production, a firm selling sunglasses in a competitive market receives $10 for each unit it produces. The firm also faces an average total cost of $8. At the market price of $10 per unit, the firm’s profit-maximizing quantity is 500. What are the firm’s current profits? Should the firm raise of lower the price they are charging for sunglasses? What is likely to occur in this market as we move from the short run to...

At the current level of output, a profit-maximizing firm in a competitive market earns average revenue...

At the current level of output, a profit-maximizing firm in a competitive market earns average revenue of $25, has an average total cost of $22 and an average variable cost of $17. If the firm's marginal cost curve is equal to its average total cost curve at an output level of 20,000 units, then the firm earns profit of $60,000 at its current level of output. True False The short-run supply for a firm in a perfectly competitive market will...

If a firm in a monopolistically competitive industry is profit-maximizing, it should choose its level of...

If a firm in a monopolistically competitive industry is profit-maximizing, it should choose its level of advertising such that the marginal revenue of an additional dollar of advertising: a) Is equal to the elasticity of its demand curve minus 1 b) Is exactly $1 c) Increases revenues by $1 d) Is equal to 1 plus the elasticity of its demand curve e) Is equal to the elasticity of its demand curve

How do a competitive firm, monopolist and monopolistically competitive firm determine its profit-maximizing level of output...

How do a competitive firm, monopolist and monopolistically competitive firm determine its profit-maximizing level of output and price? Explain your answer.

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.

We know that a profit maximizing competitive firm will set its price equal to the market...

We know that a profit maximizing competitive firm will set its price equal to the market price. Briefly describe why a profit maximizing competitive firm will not set its price above the market price. Also, describe why a profit maximizing competitive firm will not set its price below the market price.

1. Suppose, a perfectly competitive firm is trying to determine its profit-maximizing level of output. The...

1. Suppose, a perfectly competitive firm is trying to determine its profit-maximizing level of output. The product sells for $260 per unit. The total cost function is given by C = 1000 + 80Q – 6Q2 + .2Q3. Find the equilibrium price and maximum profits. Also, find the shutdown point for this firm. 2. You are the manager of a monopolistically competitive firm, and your demand and Cost functions are given by Q = 20 – 2P and C =...

Question