Which of the following statement is true? The entire marginal cost curve becomes the firms short-run...

Which of the following statement is true?

The entire marginal cost curve becomes the firms short-run supply curve.

Market demand is infinitely elastic in all competitive industries.

The average variable cost curve represents the short run supply curve for competitive firms.

--	Normal profits are a cost of production. (I chose this one. Is this right?)

Competitive firms can earn no economic profits during the short run period of time.

Expert Solution

Let's see each option separately.

a) The option is "false". The marginal cost curve above the point where the marginal cost curve intersects the variable cost curve becomes the supply curve. That is also the shutdown point. Below this, there is no supply.

b) "false". for monopoly, monopolistic competition, and other non-competitive markets the demand is not infinitely elastic.

c) "False" short-run supply curve represents the cost the firm incurred in the production of good. At the point where it meets the AR and MR curve with the MC curve that is the equilibrium point. Anything price above it is profit and below it is a loss.

e) This statement is actually for the long run, not the short run.

d) True Normal profit includes all that the firm earns in the short run. Profit includes a return for all agents of production land, labor, capital, and enterprise. This profit is a part of the cost incurred in the production. It is also the break-even where all the salaries, interest, rent and compensation is included. Hence, your answer is right.

Rahul Sunny answered 2 years ago

The short-run supply curve for a perfectly competitive firm is its A. marginal cost curve above...

The short-run supply curve for a perfectly competitive firm is its A. marginal cost curve above the average variable cost curve. B. marginal cost curve above the average fixed cost curve. C. average variable cost curve above the marginal cost curve. D. average variable cost curve above the average total cost curve. E. average variable cost curve above the average fixed cost curve.

1. The firm's short-run supply curve runs up the marginal cost curve a to the shutdown...

1. The firm's short-run supply curve runs up the marginal cost curve a to the shutdown point. b from the shutdown point all the way up the curve. c to the break-even point. d from the break-even point all the way up the curve. 2. When marginal cost is greater than marginal revenue, the monopolist can increase its profit or minimize its loss by a expanding output. b reducing output. c lowering price. d producing where price = ATC. 3....

Explain the relationship between the marginal cost curve of an individual firm and the short run...

Explain the relationship between the marginal cost curve of an individual firm and the short run market supply curve in a perfect competition industry.

Which of the following is true in the short run?

Which of the following is true in the short run? Multiple Choice The average total cost curve is a parabola that opens to the right along the X axis. The average total cost curve is a parabola that opens up along the Y axis. The average variable cost curve is a parabola that opens up along the X axis. The marginal cost curve is a parabola that opens down along the Y axis.

1. Which statements about the short-run are true? I. Marginal cost intersects the minimum of average...

1. Which statements about the short-run are true? I. Marginal cost intersects the minimum of average variable cost. II. Average fixed cost is always declining as the quantity increases. III. Marginal cost intersects the average fixed cost at the maximum of the average fixed cost. a. only III is true b. only I is true c. None of the other answers is correct d. only II and III are true e. only I and II are true 2. Coffee and...

The short-run supply curve for a firm in a perfectly competitive industry is: The short-run marginal...

The short-run supply curve for a firm in a perfectly competitive industry is: The short-run marginal cost curve that is above minimum average variable cost (which takes into account the fact that the firm should shut down if price falls below average variable cost). The entire average variable cost. The entire short-run marginal cost curve. The entire average total cost curve. Which of the following statements is true regarding short-run and long-run costs? (Assume all cost curves have typical shapes,...

A perfectly competitive firm's short-run supply curve is: A. its marginal cost curve above the AVC...

A perfectly competitive firm's short-run supply curve is: A. its marginal cost curve above the AVC curve B. its marginal cost curve below the marginal revenue curve C. horizontal at the market price D. its total cost curve above the AVC E. its marginal revenue curve below the ATC curve

1. When the short-run marginal cost curve is upward-sloping, The average total cost curve is upward-sloping...

1. When the short-run marginal cost curve is upward-sloping, The average total cost curve is upward-sloping There are diseconomies of scale. The average total cost curve is above the marginal cost curve. Diminishing returns occurs with greater output. 2. Marginal revenue is the change in Group of answer choices Average revenue when output is changed. Average revenue when price is changed. Total revenue when output is changed. Total revenue when price is changed. 3.The shutdown point occurs where price equals...

The competitive firm's short-run supply curve is that portion of the Select one: a. marginal cost...

The competitive firm's short-run supply curve is that portion of the Select one: a. marginal cost curve that lies above average total cost. b. average variable cost curve that lies above marginal cost. c. average total cost curve that lies above marginal cost. d. marginal cost curve that lies above average variable cost.

A competitive firm’s short run supply curve is equivalent to the portion of its marginal cost...

A competitive firm’s short run supply curve is equivalent to the portion of its marginal cost curve which lies above its average variable cost curve. Explain fully why this is the case. B. Define economic rent. Suppose a competitive firm is able to earn economic profit due to using an especially high-quality and scarce resource. Explain (in words and/or with a graph) how in the long run owners of the scarce resource are able to capture the economic profit from...

Question