Question

In: Economics

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?

What is the average variable cost for the first 100 units?

C. What is the marginal cost per unit for the first 50 units?

What is the marginal cost for units 51 and higher?

D. For each of the first 50 units, does MR exceed MC?

What about for units 51 and higher?

E. What output level will yield the largest possible profit for this purely competitive firm?

Expert Solution

Yes Price exceeds average variable cost for the first units since the average variable cost for the first units is dollars per unit and the market price for the product is dollars.

yes price exceeds average variable cost for the first units because the average variable cost for the first units is =

The marginal cost per unit for the first units is

Same the marginal cost per unit for units and higher is

The output level that will yield the largest possible profit for this purely competitive firm is units because anything larger will cause the profits to fall.

Rahul Sunny answered 2 years ago

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.

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....

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Total Product Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1 $150.00 $25.00 $175.00 $ 25.00 2 75.00 23.00 98.00 21.00 3 50.00 20.00 70.00 14.00 4 37.50 21.00 58.50 24.00 5 30.00 23.00 53.00 31.00 6 25.00 25.00 50.00 35.00 7 21.43 28.00 49.43 46.01 8 18.75 33.00 51.76 68.07 9 16.67 39.00 55.67 86.95 10 15.00 48.00 63.00 128.97 The accompanying table gives cost data for a firm that is selling in a purely competitive...

In a perfectly competitive market, if a firm raises the price of its product from the...

In a perfectly competitive market, if a firm raises the price of its product from the prevailing market price of $179 to $199, it will likely cause the firm to reach its shutdown point immediately. will cause the firm to recover some of its opportunity costs. would likely result in a substantial loss of sales to competitors. is a sure sign the firm is raising the given price in the market.

A perfectly competitive firm faces a market-determined price of $25 for its product.

A perfectly competitive firm faces a market-determined price of $25 for its product.(1) (2) (3) (4) (5) (6) (7)QuantityTotal costAverage total costMarginal costMarginal revenueProfit margin0 1000 100 2000 200 3300 300 4800 400 7000 500 9600a. The firm’s total costs are given in the schedule above. Fill in columns 3 and 4 for average total cost and marginal cost. b. Fill in columns 5 and 6 for marginal revenue and profit margin. c. How much output should the competitive firm...

Consider a firm which sells its product in a perfectly competitive market where the market price...

Consider a firm which sells its product in a perfectly competitive market where the market price is $4.20 per unit. The firms in the market have identical cost structures and is described by the following equations: TC = 40 + 0.1q2(squared) - 0.2q ATC = 40/q + 0.1q- 0.2 MC = 0.2q - 0.2 AVC= 0.1q - 0.2 1.a) What quantity should the firm produce to maximize its profit? 1.b) What is the firm’s profit at its profit-maximizing level of...

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?

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.