Reference no: EM131094414
What conditions are necessary to determine if the purely competitive firm should produce in the short run? State the marginal revenue and marginal cost conditions and the total revenue and total cost conditions.
What quantity should the purely competitive firm produce to maximize profits? Analyze from a total revenue and total cost perspective and a marginal revenue and marginal cost perspective.
Under what conditions will a purely competitive firm realize an economic profit? Give a response from a marginal revenue and marginal cost perspective and from a total revenue and total cost perspective.
Why is the level of output at which marginal revenue equals marginal cost the profit-maximizing output?
Suppose a bridge for automobiles was constructed across a river and all the costs associated with its construction have been paid. The amount of traffic is such that there are no foreseeable problems of overcrowding in the use of the bridge. Assume, also, that the extra cost associated with traffic crossing the bridge is for all practical purposes equal to zero. What toll should be charged to achieve the most efficient use of the bridge?
Explain the marginal revenue and marginal cost approach to profit maximization and use it to describe profit, loss, and shut down situations for the purely competitive firm.
Tomato Farms is selling tomatoes in a purely competitive market. Its output is 5000 bushels, which sell for $15 a bushel. At this level of output, the marginal cost is $15 a bushel and average total cost is $14.50 a bushel. Should the firm increase output, decrease output, or not produce? Why?
Good Grapes is selling grapes in a purely competitive market. Its output is 5000 pounds, which it sells for $5 a pound. At the 5000-pound level of output, the average variable cost is $4.00, the marginal cost is $4.25, and the average total cost is $4.50 a pound. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine the optimal level of output?
Doggy Treats is selling dog treats in a purely competitive market. Its output is 800 treats, which it sells for $10 a treat. At the 800-treat level of output, the marginal cost is $11, the average variable cost is $9.00, and the average variable cost is $8.00. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine that optimal level of output?
Shazam, a maker of magic wands, is selling in a purely competitive market. Its output is 500 wands, which sell for $10 each. At this level of output, the marginal cost is $10 and the average variable cost is $12. Should the firm increase output, decrease output, or not produce? Why?
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Which best describes credit default
: Which best describes a credit default swap? A) It is designed to reduce interest-rate risk. B) The issuer receives payments from the buyer in return for agreeing to make payments to the buyer if the underlying security goes into default. C) Issuers a..
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Productivity contribute to economic growth
: From one year to the next, a country's output rose from 4000 to 4500, its capital stock rose from 10,000 to 12,000, and its labor force declined from 2000 to 1750. Suppose aK = 0.3 and aN = 0.7. How much did productivity contribute to economic growth..
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Local products succeed on the global markets
: Countries want to protect their own markets, but also they are keen to support local manufacturing and help local products succeed on the global markets. Thus, some countries resort to subsidizing exports in order to make the products cheaper on the ..
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The effort costs of the stall holders
: Crepe Creations is considering franchising its unique brand of crepes to stall-holders on Hermoza Beach, which is five miles long. CC estimates that on an average day there are 1,000 sunbathers evenly spread along the beach and that each sunbather wi..
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The purely competitive firm produce to maximize profits
: What conditions are necessary to determine if the purely competitive firm should produce in the short run? State the marginal revenue and marginal cost conditions and the total revenue and total cost conditions. Why is the level of output at which ma..
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What is the difference between short run and the long run
: What is the difference between the short run and the long run? Explain the difference between total product, marginal product and average product. What is the relationship between total product, marginal product, and average product shown by the law ..
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What is the reserve-deposit ratio
: Assume that the currency-deposit ratio is 0.5. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action increased the money supply by $2 million. What is the reserve-deposit ratio?
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Who has the comparative advantage in ironing
: John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Who has the comparative advantage in ironing? What is the opportunity cost of Jon ironing a shirt? What is th..
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The concept of mutually assured destruction
: The concept of Mutually Assured Destruction (MAD) is cited by many scholars as the mechanism that kept the peace during the Cold War. However, that does not mean the concept was not problematic. Was the United States government actually protecting it..
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