Question
In: Economics
A firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC =...
A firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC = $6; AVC = $3; MR = MC = $5. The firm is
Solutions
Expert Solution
Answer: there is economic loss
As per the condition of competitive market, the stage of equilibrium is (P = MC), which is $5. This price is smaller than ATC of $6.
Therefore, the economic loss per unit = ATC – P
= $6 - $5
= $1
Although there is economic loss, the firm should not leave the market in the short-run because the price ($5) covers the AVC of $3.
In the long-run the firm may get normal profit.
Rahul Sunny answered 1 year agoRelated Solutions
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A firm in a perfectly competitive industry knows the following
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Price Q
of
Output
Total Revenue
Total
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Total Fixed Cost
P? Q? 7,400 TC? 3,300
Total Variable
Cost Average
Total Cost
Average Variable
Cost MC
TVC? 9
3
5
Part 1. Average Fixed Cost ____
Part 2. Price _____
Part 3: Quantity _____
Part 4. Total Cost _____
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15. A typical firm in a monopolistically competitive industry faces the following demand and total cost...
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Assume the cost data is for a perfectly competitive firm: Q AFC AVC ATC MC 1...
Assume the cost data is for a perfectly competitive
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Q
AFC
AVC
ATC
MC
1
60
45
105
45
2
30
42.5
72.5
40
3
20
40
60
35
4
15
37.5
52.5
30
5
12
37
49
35
6
10
37.5
47.5
40
7
8.57
38.57
47.14
45
8
7.5
40.63
48.13
55
9
6.67
43.33
50
65
10
6
46.5
52.5
75
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P = 40
P = 32
Will this...
Assume the cost data is for a perfectly competitive firm: Q AFC AVC ATC MC 1...
Assume the cost data is for a perfectly competitive
firm:
Q
AFC
AVC
ATC
MC
1
60
45
105
45
2
30
42.5
72.5
40
3
20
40
60
35
4
15
37.5
52.5
30
5
12
37
49
35
6
10
37.5
47.5
40
7
8.57
38.57
47.14
45
8
7.5
40.63
48.13
55
9
6.67
43.33
50
65
10
6
46.5
52.5
75
Complete the following table:
P = 56
P = 40
P = 32
Will this...
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Please answer the following questions.
Suppose market price is currently at $2.
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b) What is the profit for the firm at the profit maximizing
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Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC)
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(MC), average total cost (ATC), and average
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10
110
15
150
20
180
25
225
30
300
35
385
40
480
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