Homework answers / question archive / The table below represents the costs and market price facing a perfectly competitive firm

The table below represents the costs and market price facing a perfectly competitive firm

Economics

Share With

The table below represents the costs and market price facing a perfectly competitive firm. Complete both tables. ATC Quantity 1 Price 70 70 70 70 2 Marginal Cost 100 20 Total Revenue 70 140 210 280 350 Total Cost 100 120 150 200 100 60 50 50 3 30 4 50 5 70 54 270 360 70 90 6 70 420 60 Profit Maximizing Quantity Firm's Profit a. How can you tell that the data in #8 refers to the short run? (Hint: Costs above are economic costs.) b. What will the price fall to in the long run? (Hint: Costs above are economic costs. In the long run, the firm will be productively efficient.)
9. a. Firm A is in a perfectly competitive industry. Firm A can either advertise its product individually, or it can partner with several other firms in the industry and advertise the goods they all sell. Which plan is more likely to be successful for firm A? Explain your answer. (Hint: Consider the characteristics of perfect competition in your answer.) Firm A should partner with other firms in the industry and collusively should advertise the good they sell. In perfect competition. No firm has an incentive to advertise because advertisement leads to increase in demand but not of a firm, but industry due to which all firms benefit. Thus no firm will advertise because an increase in advertisement will benefit other firms as well not just one specific firm. b. Why would it be a mistake if the firm in #9 charged a price of $12?
12. Based on the graph below, complete the table. Price 12 Marginal Cost 11.50 11 10.50 Average Total Cost 10 9.50 10 20 30 40 50 60 Quantity 45 11 495 Profit Maximizing Quantity Profit Maximizing Price Total Revenue Total Cost* Maximum Profit *Total Cost = ATC * Quantity 472.5 22.5 13. In the previous question, why would the firm not charge a price of $10.50?