Hello, Can you please help me with these microeconomics questions. I am complete
ID: 1127537 • Letter: H
Question
Hello,
Can you please help me with these microeconomics questions. I am completely lost and confused with the concept. Thank you in advance.
I Suppose a price-taking firm produces 100 units when the market price is $200 per unit. chat output rate marginal cost is $200, average tocal cost is $240, and average variabie cost 5170, What can you determine about the market pnce that would force the im to shut dow. in the shorn run? (a) It equals 5200. (b) It is between S170 and $240. (e; It is less than 5170. (d) It is berween S170 and S200. (e) It equals 5240. | Losses for a perfectly competitive firm that should continue to operate in the short nun are minimized when (a) MR is maximized. (b) MR - MC. (e) PExplanation / Answer
21. The answer will be (c) It is less than $170. Shut down point is that point where the Average variable cost is equal to price of Average revenue. In the question Price is $200 and average variable cost is $170. Hence, if the price goes down $170, then the question of shut down arises.
22. The answer will be (b) MR = MC. It is the first order condition to get the equilibrium of a firm. Hence, in the short run the firm can minimise the losses (invesrsely increase the profit) by producing at a level output where MR=MC.
23. The answer will be (d) P=MC. In the perfect competition market the proft can be maximised by producing at this level of output only. Here, price is nothing but the MR. So in other words MR = MC is the profit maximizing condition.
24. The answer will be (b) produce 8 units at a price of $11 per unit. It is a case of monopolistic competition market. Here the first order condition for equilibrium is MR=MC and it is corresponding to output 8 and price 11. The monopolistic competition firm cannot go to the excess capacity.
25. The answer will be (c) in an area of decreasing average cost. In long run monopolistic competitive firm cannot go to the excess capacity level. It always gets equilibrium where the average cost is decreasing. He will not choose a portion of increaseing cost because he will not produce at an increaseing cost.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.