d. What are the shut-down rules for competitive firms in the short-run? Which one of them...

d. What are the shut-down rules for competitive firms in the short-run? Which one of them recommends temporary shut-down like re-organization and which recommends permanent exit. Why?

e. State the profit-maximizing conditions (rules) under perfect competition in the long-run.

f. What does perfect competition suggest about market efficiency? What about market fairness, equality, social justice, and all other social goals?

a. State the profit-maximizing conditions (rules) under perfect competition in the short-run.

Expert Solution

Rahul Sunny answered 1 year ago

1. Explain why perfectly competitive firms have to shut down in both short and long run.

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.

7. In the short run, firms are expected to shut down if the price they receive...

7. In the short run, firms are expected to shut down if the price they receive is less than their AVC. In the long run, firms are expected to exit if the price they receive is less than their ATC. Explain why this difference occurs.

Explain why a perfectly competitive firm will shut down in the short run if price is...

Explain why a perfectly competitive firm will shut down in the short run if price is lower than average variable cost but will continue to produce if price is below average total cost but above average variable cost. In long-run competitive equilibrium, P = MC = SRATC = LRATC. Because P = MR, we can write the preceding condition as P = MR = MC = SRATC = LRATC. The condition thus consists of four parts: (a) P = MR,...

What is the difference between the firm’s shut down point in the short run and in...

What is the difference between the firm’s shut down point in the short run and in the long run? Why are firms willing to accept losses in the short run but not in the long run?

Given the current situation, many firms were forced to shut down in the short-run. However, it...

Given the current situation, many firms were forced to shut down in the short-run. However, it is being assumed that many will reopen and go back to business in the near future. Look at a specific firm or industry and discuss the decision these firms need to make and how you believe conditions will impact these decisions.

18. A firm should shut down in the short run if:

18. A firm should shut down in the short run if: a. price is greater than average variable costs b. average fixed costs are greater than marginal revenue c. price is less than average variable costs d. total costs are greater than fixed costs 19. A firm is said to be making profits when: a. marginal revenue exceeds marginal costs. b. marginal revenue exceeds variable costs. c. average revenue exceeds average total...

Q 1) explain the short-run break-even price as well as shut-down price for a competitive firm....

Q 1) explain the short-run break-even price as well as shut-down price for a competitive firm. (2 points) Q 2) Why is the level of output where marginal revenue equals marginal cost called as the profit-maximizing output under perfect competition? Show your proof. (2 points) Q 3) Describe the shape of short run supply curve in perfect competition. (2 points) Q 4) Do you agree that companies under perfect competition as well as monopoly are making profits in the long...

A monopolist will shut down in the short run if: a. total revenue is less than...

A monopolist will shut down in the short run if: a. total revenue is less than total variable cost. b. price is less than marginal revenue. c. marginal revenue is less than price. d. total revenue is less than total fixed cost. e. marginal revenue is less than marginal cost. A movement from an abnormally high rate of unemployment toward a more typical level of unemployment would: a. move an economy from a point on the production possibilities curve to...

In the short run, under what conditions should the firm shut down? average total cost at...

In the short run, under what conditions should the firm shut down? average total cost at the minimum point price greater than average variable cost price less than average variable cost marginal revenue greater than marginal cost marginal revenue greater than average total cost

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