Should the firm continue to operate in the short run

Assignment Help Operation Management
Reference no: EM131128465

1) Lentz's, Incorporated sells paper in a perfectly competitive market at a price of $2 per ream. At the profit-maximizing (cost-minimizing) level of output, average total cost is $2.50 per ream and average variable cost is $1.95 per ream. Should the firm continue to operate in the short run? Explain.

2) Suppose the widget industry is perfectly competitive. A monopoly purchases all widget producers in the market. List three ways in which the market outcome under monopoly will differ from the market outcome under perfect competition.

3) Why do existing firms earn smaller profits as new firms enter an industry?

2055_media_38c_38cbc543-9745-4ac0-ad78-89669bc240a2_phpOuSYYW.png

4) Consider the decision tree depicted in Figure 12.4 concerning a collusive agreement between firms owned by Bob and Donna. Each participant has the option of following the terms of the agreement or cheating on the terms of the agreement, but neither knows what the other will do. What is the dominant strategy for Bob? For Donna? Which strategy should player, Bob and Donna, choose to maximize the potential gain? What do you think the outcome of this game will be? Carefully explain your answers.

Verified Expert

1. In short run firm can easily maximise its profits by changing price anytime which is not possible in case of perfect competition. 2. There is great difference between monopoly and perfect competitive market structure and can be understood properly if studied in brief. 3. Existing firms continue to earn lesser profits as they have old techniques as compare to new firms. 4. Human psychology affects the results of earning profits. Thus these points should be taken care of while doing questions

Reference no: EM131128465

Questions Cloud

Provide your maximum design values in a tabulated form : Considering the above combinations and using Spacegass determine the maximum (positive and negative) reactions, shear forces and bending moments the beam should be designed for. These maximum values are known as "design" values.
Risk-utility balancing refers to the fact that : “Big Red” is a popular car. The dash board is covered with little steel studs. In an accident, Betty, sitting next to her boyfriend and not wearing a seat belt, smashes her face on the dash board. The steel studs make the injuries worse. Her boyfrien..
Brief description of the apollo moon landing program : A brief description of the Apollo Moon Landing program is to be included concentrating on the landing sites and most important discoveries (including analysis of the lunar material brought back to Earth)
How can effectively and biblically respond to poverty : Our role as public health professionals often requires us to make recommendations to fellow Christians as to how we can effectively and biblically respond to poverty
Should the firm continue to operate in the short run : Lentz's, Incorporated sells paper in a perfectly competitive market at a price of $2 per ream. At the profit-maximizing (cost-minimizing) level of output, average total cost is $2.50 per ream and average variable cost is $1.95 per ream. Should the fi..
What entry will pass to create provision for doubtful debts : It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past experience, it is estimated that 5 % of the sundry debtors are doubtful. It is also suppose that during the year 2008 actual bad debts were Rs. 1,6..
What happens to all stuff that get sucked into black hole : What happens to all the stuff that get's sucked into the black hole? Would it pop out randomly at some other place or something? Or would things not survive a black hole
Prepare budgeted income statement for the year : An electronic company manufactures Graphics Card, which has a fixed manufacturing overhead budget for year 20X5 of $1,800,000. The sales of Graphics Card are expected to be 500,000 units for the year. All variable manufacturing costs are expected to ..

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd