7. At profit-maximizing output, what four letters indicate: • Total revenue? (Re

Question

7. At profit-maximizing output, what four letters indicate:
• Total revenue? (Remember, four letters—a rectangle.)
• Total cost?
• Total variable cost?
• Total fixed cost?
• Total economic profit?

8. If price falls below what point, this firm will not operate in the short run? (No letter needed, just an explanation.)

9. What will happen to this firm’s price, output, and economic profit in the long run? Why?

10. Where will the price settle in the long run? Remember, all purely competitive firms are theoretically doomed to make only normal profit in the long run. (Again, no letter answer, just an explanation.)

11. Why is the long-run equilibrium position of a purely competitive firm productively and allocatively efficient?

Explanation / Answer

7.) Again, can not do much without the graph but the total revenue should be the box with the output and revenue (price) as ends, cost will be output and cost (price), total economic profit will the box between revenue and cost extending to the output. Thats the best I can do here.

8.) Average Variable Cost.

9.) Difficult to determine without graph, but the economic profit should diminish as competition increases over the long run.

10.) Price should settle at the point at which MR=MC or the point where demand=supply, same deal.

11.) Long run equilibrium is productively efficient because the firms are producing exactly what the need to be profit maximizing. It is allocatively efficient since in the long run the scarce resources are able to be used in a efficient manner that the market needs and has accurately priced.

Feel free to PM or find me on twitter @jonathonrscott if you have any questions or you want to shoot me a picture of that graph.

Related Questions

Navigate

• Browse (All)
• Browse 7
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.