_depicting the cost structure for a firm in a competitive market Price ATC MG AV
ID: 1119390 • Letter: #
Question
_depicting the cost structure for a firm in a competitive market Price ATC MG AVC Ps P4 o, Q Q, a Quantity 18. Refer to Figure#2. When price rises from P3 to P5, the firm finds that a. remaining to produce output at Q2 would leave the firm with positive profit. b. marginal cost exceeds marginal revenue at a production level of Q2. c. expanding output to 4 would leave the firm with positive profit. d. expanding output to Q3 would leave the firm with positive profit. 19. In the long run a p fectly competitive firm must be operating at their efficient scale. Thus, Refer to Figure#2 The long-run supply curve for a firm in a perfectly competitive market is a the portion of its marginal cost curve that lies above its average total cost starting at price P1 and upward. b. the portion of its marginal cost curve that lies above its average variable cost starting at price P2 and upward. c. the portion of its marginal cost curve that lies above its average total cost starting at price Ps and upward d. the portion of its marginal cost curve that lies above its average total cost starting at price P4 and upward. 20. In the long run, a perfectly competitive market, which firms earn a negative economic profit. The market experiences: a. an increase in equilibrium price as firms exit. c. a decrease in equilibrium price as old firms exit. b. more firms enter as long as they still make an economic loss. d. no new firms enter and no old firms leave the market. 21. Because a monopolist has market power, which of the following is a characteristic of a monopolist? a. It achieves efficiency in production at the profit-maximizing output as a perfect competitive does. b. When it produces an extra unit of output, it must lower its price on all of its production. c. It can charge any price as it wishes. d. It faces a horizontal market demand curve. 22. Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town. Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs to restaurants. Assuming that Angelo is maximizing his profit, which of the following statements is true? a. The price of meatballs will equal marginal cost. c. The price of meatballs will be less than marginal cost. d. None of the above is correct. b. The price of meatballs will exceed marginal cost.Explanation / Answer
18. Answer-D
When price is increased to P3 to P5 then the firm would leave the firm with positive profit. Here shows that MC is greater than the ATc and AVc means firm makes mor output and the firm makes profits.
19. Answer-B
The starting point of the supply curve is when the margnal cost curve is lies above the average variable cost. So here, the portion of its marginal cost curve that lies above its average variabe cost startng at at price P2 and upward.
20. Answer- A
We know that in the long run in the perfectly competitive market, a firm earns negative economic profits the new firms will enter the industry in which newly established firms earns normal economic profits. So here the option A holds, an increase in equilibrium price as firms exit.
21. Answer-C
We know that the monopolist has market power, then it can raise the price of good or service over the marginal cost of producing.
22. Answer- B
Here the angelo have enough market power, that means he charge the price of meatballs exceed marginal cost.
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