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- a. John operates a firm producing t shirts. There are many such firms producingidentical products to John. What market structure is this? Is it possible for John tomake a profit in the long run? Illustrate using an appropriate diagram. b. John decides to innovate his business and begins printing t shirts with customercreated content. Will John be able to make a profit in the short run and the longrun? Explain using relevant diagrams and comment on the implied market c. Provide a strategy for John to make greater than normal profits in the long run. Isthis likely to be the case in the market for this good?1 Complete the Table Note: TFC = 5. QTC MC ATC 0 1 2 3 4 5 6 29 38 X 2 6 X 5 5 2 Maximize Profit Presume the table on the left is for a price taker firm when the market price is $8. What is the: Profit maximizing quantity: Profit: $ 3 Optimizing When a consumer is optimizing, what is the mathematical expression that will be true for any two goods? Translate that math into English.Figure 14-10 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firm Pr (A) Firm d) Market 14.00 €€ 12:00 $3.00 300 600 Deantry 01 02 Drenty Refer to Figure 14-10. If there are 500 identical firms in this market, what is the value of Q2? O a. 12,000 Ob. 60,000 Oc. 240,000 d. 300,000
- If a market has few barriers to entry and manyfirms, how might firms still have positive economic profit? Describe a strategy a firm in thistype of market might use to maintain economicprofitsKali is a dot-com entrepreneur who has established a Web site at which people can design and buy aring. Kali pays $600 a month for a Web server and Internet connection. The rings that customers design are made to order by another firm, and Kali pays this firm $20 a ring. Kali has no other costs. The table shows the demand schedule for Kali's rings. What is Kali's profit-maximizing output, price, and economic profit? Price (dollars per ring) 100 Quantity (rings per month) 0 80 20 60 40 40 60 20 80 0 100 Kali's profit-maximizing output is rings a month. Kali's profit-maximizing price is $ a ring. Kali's economic profit is $ a month.Consider the same firm from the end of week quiz with the following TVC schedule and a fixed cost of 32. Q 1 2 3 4 5 6 7 8 9 10 TVC 20 30 36 44 54 66 80 96 114 134 Now let the demand for this good be given by the following schedule and assume that this is a perfectly competitive market with identical firms and free entry/exit. P 6 8 10 12 14 16 18 20 Qd 500 480 460 440 420 400 380 360 a. Assume that this market is in a long-run equilibrium. Show the long-run supply and the short-run supply (again, you may want to look…
- 300 270 240 210 180 150 120 90 60 30 0 20 MC 32 40 50 60 70 80 The figure shows MC, MR and ATC curves for Joe's Good Enough Cafeteria, a firm that operates in a competitive market. If the firm is producing 50 units of output, increasing output by one unit would the firm's profit by $ Joe's SHORT RUN equilibrium quantity is equal to ATC Joe's LONG RUN equilibrium quantity will be MR If the firm is producing 70 units of output, increasing output by one unit would the firm's profit by $ and profit is $ and profit will be $Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True FalseThe graph above illustrates the electricity market. Consider market competition between firms where price is based on AR and select the most appropriate answer. Question 5 options: in the short-run, the demand curve and average revenue shift as other firms enter the market and increase competition. in the short-run, the demand curve and average revenue shift as other frims leave the market and decrease competition. in the long-run, the demand curve and average revenue shift as other frims enter the market and increase competition. in the long-run, the demand curve and average revenue shift as other frims leave the market and decrease competition.
- 11.00 10.00 9.00 8.00 7.00 6.00 5:00 4.00 5.00 2.00 1.00 Dem 90,000 100.000 110.000 120.000 130,000 140,000 150,000 150.000 What is the profit per firm at the short run equilibrium price? Ⓒa. zero b. 7500 4500 Ⓒd. 9000The following graph depicts the costs incurred by a Local egg seller, Rahim. Rahim is faced with strong competitors who are selling exactly the same product. Use the graph to answer the following questions- Price/Cost per egg MC 12 ATC 8 MR3 AVC 6. MR2 MR1 Quantity 100 200 300 400 a)At what price will Rahim try to minimize loss by selling eggs in the market? b)At what price will there be a break-even point?Answer the following question based on the graph below, which is for Blue Smooth Yoga Mats Ltd. one of 50 small firms operating in the industry. Price, costs 90 15 75 60 60 45 30 15 0 D MR AC MC 125 250 375 500 625 750 875 1000 1251250 Quantity per period a. What is the profit-maximizing output? Output: b. What price will the firm charge? Price: $ c. How much excess capacity exists at the output in (a)? Excess capacity: