ECON 260 7. Refer to Table i1. Consumers are willing to pay S68 per unit of port
ID: 1114836 • Letter: E
Question
ECON 260 7. Refer to Table i1. Consumers are willing to pay S68 per unit of port wine. What is Soper's Port Vineyard's economic profit at de profit maximizing point? a $45 8. The long-run supply curve for a firm in a perfectly competitive market is a horizontal c. the portion of its marginal cost curve that lies above its min(ATC) and beyond. d the portion of its marginal cost curve that lies above its minAC) and beyond b.-$45 c. $15 d.-$15 b. likely to slope downward When profit-maximizing firms in competitive markets are earning negative peofis, a. new firms will enter the market b. market demand must exceed market supply at the market equilibrium price. c. market supply must exceed rearket demand at the market equilibrium price. d. the most inefficient firms whose their AVC is above the market price will leave the narket Figure# 1: The cost struc tire for a firm in a competitive market. MC ATC AVC P7 P3 P2 PI 1 2 3 4 Q Quentity 10 Refer to Figure #1. When price falls from Pto P, the firm tds that it can minimine ls profi, loss by producing in output at, 11. Refer to Figure #1 . When price rises from P. to Ps firm finds that a profit is still maximized at a production level of Q cit can earn a positive profit by increasing production to Q4. b. it can earn a positive profit by increasing peoduction to Qs d. fixed costs are lower at a production level of Qu it realizes that the-net price is between Pand P. Under such 12 Refer to Figure "I The firm will shat down temporarily circumstance, the firm a. still has to pay its variable costs, but not its fixed costs. c. still has to pay both its variable costs and its fixed costs b. still has to pay its fixed costs, but not its variable costs d. has to pay nelither its variable costs nor its fixed costs 13. In the long run, a perfectly competitive market, with economic losses will NOT experience: a an increase in equilibeium price as firms exit b, more firms exit as long as they still make an economic loss d. all of the above c. a decrease in equilibeium price as old firms exit. 14 Because a monopolist has market power, which of the following is NOT a characteristic of a mosopolist? RMUNNICHA
Explanation / Answer
(7) Table 1 is required but missing.
(8) (d)
For individual firms, short run and long run supply curves are its MC curve above the minimum point of AVC curve.
(9) (d)
Since exit is free, firms who cannot cover their variable costs with revenue (Whose price < AVC) will exit.
(10) Q1
Firm will maximize profit at intersection of Price and MC curves. When Price is P1, it intersects MC curve at an output of Q1.
(11) Firm will earn positive profit by increasing production to Q3.
Firm will maximize profit at intersection of Price and MC curves. When Price is P7, it intersects MC curve at an output of Q3.
NOTE: As per Chegg answering guideline, first 4 questions are answered.
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