QUESTION 13 In the short run, a perfectly competitive firm will stay in business as long...

QUESTION 13

In the short run, a perfectly competitive firm will stay in business as long as:

		Price equals average revenue.
		marginal revenue is greater than marginal cost.
		price exceeds average variable cost.
		price is less than average variable cost.

QUESTION 14

Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC), and the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would:

		immediately shut down and get out of the industry.
		continue to produce a quantity such that marginal revenue equals marginal cost.
		shut down temporarily, in hopes of restarting in the near future.
		cut price and expand output in hopes of achieving economies of scale

QUESTION 15

Where is the "short-run shut down point" for a perfectly competitive firm?

		The lowest point of AVC curve.
		The lowest point of ATC curve.
		The lowest point of MC curve.
		It depends. Could be the lowest point of AVC, ATC, or MC curve.

QUESTION 16

The marginal revenue for a price taker is

		equal to price.
		less than price.
		more tha price.
		unrelated to price.

Solutions

Expert Solution

13) in the short run a perfectly competitive firm will stay in business as long as price exceeds average variable cost. If if the price falls below the average variable cost the firm will immediately shutdown and exit.

Hence third option is correct.

14) For a price taker price is equal to marginal revenue.

If the market price is expected to rise at least to ATC then a price taker firm in the short run would continue to produce a quantity such that marginal revenue that is price equals marginal cost because the market price is already above the minimum average variable cost.

Hence, second option is correct.

15) the short run shutdown point for a perfectly competitive firm is the lowest point of AVC curve.

Hence, first option is correct.

16) the marginal revenue of a price taker is equal to price.

Hence, first option is correct

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

2. (a) “The short-run equilibrium of a perfectly competitive firm is similar to its long-run equilibrium”....

2. (a) “The short-run equilibrium of a perfectly competitive firm is similar to its long-run equilibrium”. Do you agree? Explain your answer (b) Monopolists have adverse effects on the consumer society and should be eliminated”. Discuss. (1200 words)

QUESTION 11 In the short-run, if a perfectly competitive firm is producing at a price below...

QUESTION 11 In the short-run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is positive. zero. negative. positive, zero, or negative. QUESTION 12 Assume that a firm's marginal revenue barely exceeds marginal cost. To maximize profit, teh firm should: expand output. contract output. maintain output. there is insufficient information to answer the question. QUESTION 13 In the short run, a perfectly competitive firm will stay in business as long as: Price...

Compare  the short run and long run for perfectly competitive firms. How do perfectly competitive firms...

Compare  the short run and long run for perfectly competitive firms. How do perfectly competitive firms adapt to market changes in the short run? What can perfectly competitive firms expect in the long run in terms of profits?

13. Firms in a perfectly competitive firm make 0 economic profit in the long run. True...

13. Firms in a perfectly competitive firm make 0 economic profit in the long run. True or False 14. A firm in a perfectly competitive market, finds that it's MR = MC occurs at Q = 100, at which point the market Price is $8. The firm's ATC = AFC+AVC = $6; Is the firm making a profit or loss at this point of production? a.Loss of $200 b.profit of $600 C.loss of $600 D. profit of $200 15. A...

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,...

Question 19 In a perfectly competitive market, a firm may have losses in the short run....

Question 19 In a perfectly competitive market, a firm may have losses in the short run. Suppose the firm’s total costs are $1,000 and fixed costs are $200 when outputs are 100. The market-determined price of the good is $9 per unit. Which of the following statement is true? a. The price is less than the average variable cost b. The firm should shut down business c. The firm should continue doing business d. The price is less than average...

In long run equilibrium for a perfectly competitive firm; the firm will produce where A. Marginal...

In long run equilibrium for a perfectly competitive firm; the firm will produce where A. Marginal cost is at a minimum B. Average fixed cost is at a minimum C. Average variable cost is at a minimum D. Average total cost is at a minimum Height of a marginal product product curve shows: A. the additional cost of producing one more unit of a good B. the additional production from producing one more unit of the good. C. the additional...

1. a. Consider a perfectly competitive firm in the short run. On a diagram, draw the...

1. a. Consider a perfectly competitive firm in the short run. On a diagram, draw the firm's average cost, average variable cost, and marginal cost curves. Briefly discuss the relationship among these curves. b. On your diagram, show how the profit maximizing level of output is determined for this firm, given a market price. Show the firm making a positive profit. c. On your diagram, show total revenue, total cost and profits associated with the production level from part b....

In the short run, a perfectly competitive firm will shut down and produce nothing if: a....

In the short run, a perfectly competitive firm will shut down and produce nothing if: a. economic profits equal zero. b. total cost exceeds total revenue. c. total variable cost exceeds total revenue. d. the market price falls below the minimum average total cost.

Explain why a perfectly competitive agricultural firm (a farm) is perfectly efficient in the long run...

Explain why a perfectly competitive agricultural firm (a farm) is perfectly efficient in the long run having achieved allocative efficiency,productive efficiency, and zero economic profit.

Subjects