7.7. You are a business manager working for a firm in a purely competitive market and...

7.7. You are a business manager working for a firm in a purely competitive market and you just hired a summer intern who does not understand how to derive the firms’ short run supply curve from the firms’ marginal cost curve.
a. Please explain to the intern how the short run supply curve is derived from the firm’s marginal cost curve. Be specific.
b. Please explain to the intern the characteristics of long run equilibrium of a purely competitive firm and how operating in a purely competitive market might impact the decision-making of the firm. Please include the implications of long-run equilibrium for productive and allocative efficiency.

Expert Solution

Rahul Sunny answered 2 years ago

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?

1) A firm operating in a purely competitive environment is faced with a market price of...

1) A firm operating in a purely competitive environment is faced with a market price of $250. The firm’s total cost function (short run) is as follows: TC = 6000 + 400Q – 20Q2 + Q3 Should the firm produce at this price in the short run? If the market price is $300, what will total profits (losses) be if the firm produce 10 units of output? Should the firm produce at this price? If the market price is greater...

The actions of a firm in a purely competitive industry have no effect on market price;...

The actions of a firm in a purely competitive industry have no effect on market price; therefore, the demand curve faced by the firm is * 1 point a. unknown. b. a downward-sloping curve. c. a horizontal line at the level of the market price. d. a firm’s total revenue curve. A competitor maximizes profit by producing the output that * 1 point a. equates price and average variable cost. b. equates TR and TC. c. equates MR and MC....

You are working for a firm that is operating in a perfectly competitive market, and exhibits...

You are working for a firm that is operating in a perfectly competitive market, and exhibits a cost function of TC = 4000 +500 Q – 2 Q2 + 0.02Q3. If the market equilibrium price is $515, should you operate? If so, what is the Profit? If the market price is $455, should you operate? Why? Finally, what is the price that would have you shutdown, layoff labor, and leave the plant idle in the short-run?

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

A purely competitive firm finds that the market price for its product is $20.00. It has...

A purely competitive firm finds that the market price for its product is $20.00. It has a fixed cost of $100.00 and a variable cost of $15.00 per unit for the first 50 units and then $25.00 per unit for all successive units. A. Does price equal or exceed average variable cost for the first 50 units? What is the average variable cost for the first 50 units? B. Does price equal or exceed average variable cost for the first 100 units?...

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.

What makes a monopolistically competitive market different from a purely competitive market or a monopolist?

Diagram a purely (product market) competitive firm in long-run equilibrium. Be sure to show both the...

Diagram a purely (product market) competitive firm in long-run equilibrium. Be sure to show both the market and the representative firm. Next, on the same diagram, show what happens to the market and the representative firm if the market demand for the product falls dramatically, for instance, due to bad press. Briefly explain your conclusions. Please show me your thought process. Please explain it as if you are telling it to someone who has no clue about economics.

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