The above figure shows some a firm\'s cost curves and its marginal revenue curve

Question

The above figure shows some a firm's cost curves and its marginal revenue curve. Based on the figure above what is the price of a can? $5.15 per can $3.00 per can $0 None of the above prices is correct. More information is needed to determine the price of a can. Based on the figure above, if the firm produces 7 can per day the firm maximizing its profit and is is not making zero economic profit is making an economic profit is incurring an economic loss is making zero economic profit is not incurring an economic loss If firms in a perfectly competitive industry are earning an economic profit and new firm the industry then there must be external benefits to consumption of the good the existing firms economic profit decreases. the new firm must incur an economic loss. consumer surplus decreases Both answers A and B are correct. Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10. If there is a permanent increase in demand, in the short run each firm produces 1,000 units and and in the long run the number of firms is 8,000 less than more than exactly more than less than less than more than less than more than more than

Explanation / Answer

Answers:

27) Based on the figure above, what is the price of a can?

E) More information is needed to determine the price of a can.

The firm’s Average Total Cost is $5.14 and the producer should fix his price more than that cost.

28) Based on the figure above, if the firm produces 7 cans per day, the firm is maximizing its profit and is making zero economic profits.

D) is; making zero economic profits. Because the firm maximizing its profit at MC = MR

29) Suppose the price of a can was $5.14. In this case, to maximize its profit the firm illustrated in the figure above would:

D) not change its production and would make zero economic profit. Because the market price it equals to ATC (i.e., 5.14).

30) If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

E) Both answers A and B are correct. Because the new firm is steals some of the profits from the existing firm. That means that the existing firm’s profits will decreases.

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