Question

In: Economics

A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal...

A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm’s goal is to maximize profit, it should:

• Produce more widgets

• Produce fewer widgets

• Continue producing 500 widgets

• Shut down

Solutions

Expert Solution

Answer
• Continue producing 500 widgets
The perfectly competitive firm maximizes profit at MC=P
and here the price =marginal cost=$50
so the firm should Continue producing 500 widgets


Related Solutions

A firm facing a price of $15 in a perfectly competitive market decides to produce 100...
A firm facing a price of $15 in a perfectly competitive market decides to produce 100 widgets. If its marginal cost of producing the last widget is $12 and it is seeking to maximize profit, the firm should Question 9 options: shut down produce more widgets continue producing 100 widgets produce fewer widgets
A firm facing a price of $10 in a perfectly competitive market decides to produce 100...
A firm facing a price of $10 in a perfectly competitive market decides to produce 100 widgets. If its marginal cost of producing the last widget is $12 and it is seeking to maximize profit, the firm should
9. A competitive firm that produces 500 units of widgets in which its marginal revenue is...
9. A competitive firm that produces 500 units of widgets in which its marginal revenue is $50 and its marginal cost is $40 and they are making $40,000 in profits and the profit maximizing level of output is 600 units of widgets where marginal revenue and marginal cost are equal at $50 and profits are $80,000. The firm is currently producing 500 units of widgets but wants to reach the profit maximizing level of output of producing 600 units of...
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...
A firm sells a product in a perfectly competitive market, at a price of $50. The...
A firm sells a product in a perfectly competitive market, at a price of $50. The firm has a fixed cost of $30. Fill in the following table and indicate the level of output that maximizes profit. How would the profit-maximizing choice of output change if the fixed cost increased from $40 to $60? More generally, explain how the level of fixed cost affects the choice of output Output Total Revenue Total Cost Profit Marginal Revenue Marginal Cost 0 1...
1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price....
1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price. decreases as the firm increases output. is greater than price. 2-Which of the following are characteristics of a monopoly market structure? In a monopoly, there is only one firm in the industry. no close substitutes are available. firm(s) have little to no price-setting power. there are low barriers to entry into the market. 3-You own a small deli that sells sandwiches, salads, and soup....
Both the perfectly competitive firm and the monopolist produce at the output where marginal revenue equal...
Both the perfectly competitive firm and the monopolist produce at the output where marginal revenue equal marginal cost, but only the perfect competitive firm achieves allocative efficiency. Explain why?
8) For a perfectly competitive firm, marginal revenue is
8) For a perfectly competitive firm, marginal revenue isA) equal to the price.B) less than the price.C) undefined because the firm's demand curve is horizontal.D) greater than the price.and10) A perfectly competitive firm will maximize profit when the quantity produced is such that theA) firm's marginal revenue is equal to its marginal cost.B) price exceeds the firm's marginal cost by as much as possible.C) firm's marginal revenue exceeds its marginal cost by the maximum amount possible.D) firm's total revenue is...
The perfectly competitive firm should produce in the a. short run if price is below average...
The perfectly competitive firm should produce in the a. short run if price is below average variable cost. b. long run if price is below average variable cost. c. short run if price is below average total cost but above average variable cost. d. long run if price is below average total cost but above average variable cost. d. long run if price is below average total cost but above average variable cost.
In a perfectly competitive market: a)firms are price setters. b)firms produce the quantity for which marginal...
In a perfectly competitive market: a)firms are price setters. b)firms produce the quantity for which marginal cost equals price. c)firms can increase profits by charging a price higher than the market price. d)buyers are price setters.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT