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FIU ECO2023 Assignment HW07 Chapter 13 spring 14

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Question;1.;award:6.25 out of;6.25 points;Question and Exercise 13-2;List three conditions;for perfect competition.Instructions:You may select more;than one answer. Click the box with a check mark for correct answers and click;to empty the box for the wrong answers.;Firms?;products are differentiated.;There;are no barriers to entry.;There;are high barriers to entry.;Both;buyers and sellers are price takers.;There;is only one firm that makes up the entire market.;Firms?;products are identical.;Firms;engage in strategic decision making.;2.;award:6.25 out of;6.25 points;Question and Exercise 13-5;A perfectly competitive firm sells its good for $20. If marginal cost is;four times the quantity produced, how much does the firm produce? Why?;Worksheet;Learning Objective: 13-02 Explain why producing an output at which;marginal cost equals price maximizes total profit for a perfect competitor.;268;Question and Exercise 13-5;Section: The Profit-Maximizing Level of Output;3.;award:6.25 out of;6.25 points;Question and Exercise 13-5 (algo);A perfectly competitive firm sells its good for $33. If marginal cost is;eleven times the quantity produced, how much does the firm produce? Why?;Worksheet;Learning Objective: 13-02 Explain why producing an output at which;marginal cost equals price maximizes total profit for a perfect competitor.;268;Question and Exercise 13-5 (algo);Section: The Profit-Maximizing Level of Output;4.;award:6.25 out of;6.25 points;Question and Exercise 13-6;The following graphs;(A?C) show the marginal cost, marginal revenue, and average total cost curves;for a typical perfectly competitive firm.;a. Identify the profit-maximizing level of output for each firm in graphs;A?C.Instructions: Use the tool 'Q;to label the profit-maximizing level of output for each firm.;b. Which of the above graphs represents a typical perfectly competitive;firm earning economic profits?;\;c. Which of the above graphs represents a typical perfectly competitive firm;earning economic losses?;d. Which of the above graphs represents a typical perfectly competitive firm;earning zero economic profit?.;e. Which of the above graphs represents a typical perfectly competitive firm in;the long run?.Explanation;The profit-maximizing level of a competitive firm is where marginal;revenue equals marginal cost. To find the profit-maximizing level of output for;a perfect competitor, find that level of output where MC = MR.;Profit is price less average total cost times output at the profit-maximizing;level of output. Perfectly competitive firms make zero profit in the long run.;5.;award:6.25 out of;6.25 points;Question and Exercise 13-9;The following graph;shows marginal cost, average total cost, and average variable cost curves;for a typical perfectly competitive firm.;a. Draw the marginal revenue curve to indicate this firm is in a long-run;equilibrium. Then label the profit-maximizing level of output.Instructions: Use the tool;MR' to draw the marginal revenue curve between Q = 0 and Q =;10. Then use the tool 'Q' to indicate the profit-maximizing level of output.;b. In long-run equilibrium, this firm is earning economic profit;equal to$.;Graphing;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-9;Section: Total Profit at the Profit-Maximizing Level of Output;6.;award:5.73 out of;6.25 points;Question and Exercise 13-10;Each of 10 firms in a;given perfectly competitive industry has the identical costs given in the;first table. The market demand schedule is given in the second table.;Firm;Quantity;Firm;Total Cost ($);Firm;Marginal Cost ($);0;12;--;1;24;2;27;3;31;4;39;5;53;6;73;7;99;Price;($);Market Quantity;Demanded;16;40;14;50;12;60;10;70;8;80;6;90;4;100;2;110;Instructions: Round all;answers to 2 decimal places.;a. The market equilibrium price and the price each firm gets for its product is;$.;b. Equilibrium market quantity is units, and each firm will;produce units.;c. Each firm will make a profit of $.;d. Firms begin to exit the market when price falls below.;Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-10;Section: Total Profit at the Profit-Maximizing Level of Output;Question #1 (of 16);Question #2 (of 16);Question #3 (of 16);Question #4 (of 16);Question #5 (of 16);Question #6 (of 16);Question #7 (of 16);Question #8 (of 16);Question #9 (of 16);Question #10 (of 16);Question #11 (of 16);Question #12 (of 16);Question #13 (of 16);Question #14 (of 16);Question #15 (of 16);Question #16 (of 16);7.;award:6.25 out of;6.25 points;Question and Exercise 13-12;How is a firm?s marginal cost curve;related to the market supply curve?;Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-12;Section: Total Profit at the Profit-Maximizing Level of Output;8.;award:6.25 out of;6.25 points;Question and Exercise 13-13;The following graph;shows marginal cost, average total cost, and average variable cost curves;for a typical perfectly competitive firm.;a. Draw the marginal revenue curve when market price is $5.50 and then;label the profit-maximizing level of output. Now label the price at which;the firm is earning zero economic profit. Finally, label the price at;which the firm would shut down temporarily.Instructions: Use the tool;MR' to draw the marginal revenue curve between Q = 0 and Q =;10 and then use the tool 'Q' to indicate the profit-maximizing level of output.;Now use the tool 'Zero' to indicate the price at which the firm is;earning zero economic profit. Finally, use the tool 'SD' to indicate;the price at which the firm would shut down temporarily.;b. In the long run, the firm will exit the market if price falls below.;Graphing;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-13;Section: Total Profit at the Profit-Maximizing Level of Output;9.;award:6.25 out of;6.25 points;Question and Exercise 13-14;Under what cost condition is the shutdown point the same as the point at;which a firm exits the market?;Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-14;Section: Total Profit at the Profit-Maximizing Level of Output;10.;award:6.25 out of;6.25 points;Question and Exercise 13-15;A profit-maximizing firm is producing where MR = MC and;has an average total cost of $4, but it gets a price of $3 for each good it;sells.;a. What would you advise the firm to do?As long as average variable costs are less than $3, in the short run;the firm should produce. In the long run, it should exit the market.;b. What would you advise the firm to do if you knew average variable costs were;$3.50?The firm should shut down in the short run and exit the market in the;long run.;Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-15;Section: Total Profit at the Profit-Maximizing Level of Output;11.;award:6.25 out of;6.25 points;Question and Exercise 13-15 (algo);A profit-maximizing firm is producing where MR = MC and;has an average total cost of $8, but it gets a price of $6 for each good it;sells.;a. What would you advise the firm to do?;b. What would you advise the firm to do if you knew average variable costs were;$7?.;Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-15 (algo);Section: Total Profit at the Profit-Maximizing Level of Output;12.;award:6.25 out of;6.25 points;Question and Exercise 13-16;A farmer is producing where MC = MR. Say;that half of the cost of producing wheat is the rental cost of land (a fixed;cost) and half is the cost of labor and machines (a variable cost). If the;average total cost of producing wheat is $8 and the price of wheat is $6, what;would you advise the farmer to do? (?Grow something else? is not allowed.);Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-16;Section: Total Profit at the Profit-Maximizing Level of Output;13.;award:6.25 out of;6.25 points;Question and Exercise 13-16 (algo);A farmer is producing where MC = MR. Say;that half of the cost of producing wheat is the rental cost of land (a fixed;cost) and half is the cost of labor and machines (a variable cost). If the;average total cost of producing wheat is $28 and the price of wheat is $22;what would you advise the farmer to do? (?Grow something else? is not allowed.);Worksheet;Learning Objective: 13-03 Determine the output and profit of a perfect;competitor graphically and numerically.;273;Question and Exercise 13-16 (algo);Section: Total Profit at the Profit-Maximizing Level of Output;14.;award:6.25 out of;6.25 points;Question and Exercise 13-17;Based on the;following table;Output;Price;($);Total Costs;($);0;10;31;1;10;40;2;10;45;3;10;48;4;10;55;5;10;65;6;10;80;7;10;100;8;10;140;9;10;220;10;10;340;a. The profit-maximizing output is;b. In the long run, the market price willrise because;Worksheet;Learning Objective: 13-04 Explain the adjustment process from;short-run equilibrium to long-run equilibrium.;279;Question and Exercise 13-17;Section: Adjustment from the Short Run to the Long Run;15.;award:6.25 out of;6.25 points;Question and Exercise 13-17 (algo);Based on the;following table;Output;Price;($);Total Costs;($);0;10;6;1;10;11;2;10;14;3;10;15;4;10;18;5;10;24;6;10;34;7;10;48;8;10;67;9;10;93;10;10;129;a. The profit-maximizing output is units.;b. In the long run, the market price will because.;Worksheet;Learning Objective: 13-04 Explain the adjustment process from;short-run equilibrium to long-run equilibrium.;279;Question and Exercise 13-17 (algo);Section: Adjustment from the Short Run to the Long Run;16.;award;6.25 points;Question and Exercise 13-21;Use the accompanying;graph, which shows the marginal cost and average total cost curves for the shoe;store Zapateria, a perfectly competitive firm.;a. If the market price of shoes is $70 a pair, Zapateria will prod pairs.;b. If the market price of shoes is $70 a pair, Zapateria will earn total profit;equal to $.;c. Should Zapateria expect more shoe stores to enter this market? Why or why;not?;d. Assuming the shoe market is a constant-cost industry, the long-run equilibrium;price is.;Graphing;Learning Objective: 13-04 Explain the adjustment process from;short-run equilibrium to long-run equilibrium.;279;Question and Exercise 13-21;Section: Adjustment from the Short Run to the Long Run

 

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