How does the market price change and what happens to profits

Assignment Help Microeconomics

Reference no: EM13239835

A firm in a perfectly competitive industry is making losses in the short run.

(i) Sketch a ‘typical' firm's Average Cost and Marginal Cost curves and in the diagram show a possible price at which the firm would produce in the short run, but make losses. [Hint: how does the price compare with the firm's average variable cost?]

(ii) Now explain what will happen in the industry as a whole in response to the losses that firms are experiencing. How does the market price change and what happens to profits?

Reference no: EM13239835

Questions Cloud

What level of profits would expect farmers to earn : Use these prices to calculate the marginal value product of fertilizer and its cost. You can do this somewhat crudely based on the table of numbers that you compiled above, or you can do something fancier using the equations that Excel fitted to t..

Explain the reaction has a dipole moment : In the reaction AH3 +H+ = AH4+, AH3 has a dipole moment and AH4+ does not. Predict the number of lone pairs that may exist on A in AH3. Hint: Find more than a single number of lone pairs that work.

How does the firm have increasing returns to scale : For a firm in a perfectly competitive market that faces a market price of $5/unit for its output, draw a diagram showing a U-shaped long run Average Cost curve and the related Marginal Cost curve so that, in the situation you show

Explain what was the origional nuclide : An unknown nuclide decays by elimination of 2 alpha particles followed by a positron. Bombarding this decay product with a 6Li nucleide creates the single nuclide Pb-207. What was the origional nuclide

How does the market price change and what happens to profits : A firm in a perfectly competitive industry is making losses in the short run. (i) Sketch a ‘typical' firm's Average Cost and Marginal Cost curves and in the diagram show a possible price at which the firm would produce in the short run, but make l..

Find the average difference in the air pressure : The wing of an airplane has an average cross-sectional area of 11 m2 and experiences a lift force of 86,000 N. What is the average difference in the air pressure

Make use of the lowest possible whole number coefficients : When the following reaction is balanced in basic solution using the lowest possible whole number coefficients, the coefficient of H2O will be: H2O2(aq) + ClO2(aq) --> ClO2-(aq) + O2(g)

What is the highest cost of migration that worker is willing : Suppose a worker with an annual discount rate of 10 percent currently resides in Pennsylvania and is deciding whether to remain there or to move to Illinois. There are three work periods left in the life cycle.

Determine the angle of the velocity vector of the package : An airplane with a speed of 76.6 m/s is climbing upward at an angle of 49.5 ° with respect to the horizontal, Relative to the ground, determine the angle of the velocity vector of the package just before impact

User Account

All Pages