When new firms enter a perfectly competitive market, the short-run market supply curve shifts right.2/29/2024 ![]() ![]() shut down,Ī profit-maximizing firm in a competitive market is able to sell its product for $13. Question 11 1 pts If a profit-maximizing firm in a competitive market discovers that at its current level of production price is greater than marginal cost it should increase its output. negative economic profits and will shut down. ![]() Question 15 1pts tPrie 10- MC ATC 9 AVC Pl P2 P3 P4 1 2 3 7 8 gatiy 4 5 If the market price is P3, in the short run, the perfectly competitive firm will earn negative economic profits but will try to remain open. ![]() If the materials (paper bags) cost her a total of $3.00, and she obtained all the vegetables and capital inputs (table, sign) at no charge from her grandmother, then her economic profits were: $7.00 O$0 (that is, she "broke even"). In three hours she is able to sell 56 pounds of vegetables at 50 cents a pound. Question 21 1 pts Instead of baby sitting for $5.00 an hour for her neighbor, Stacy sold assorted vegetables by the pound. Shut down because p ATC and the firm is making losses Decrease production so that MC falls below $27. What should he do? Stay open because price > AVC Increase production until ATC falls below $27. He discovers that his average variable cost (AVC) is $25, average total cost (ATC) is $30, and marginal cost is $27 and upward sloping. ![]() This year, the price of hammocks has fallen to $27, and Simon Cowbell, the manager of American Idle, is trying to decide what to do. increase the price of the product.ĭ Question 20 1pts American Idle sells hammocks in a perfectly competitive market. shift the market supply curve to the left. drive down profits of existing firms in the market. Question 23 1 pts When new firms have an incentive to enter a competitive market, their entry will increase demand for the product. ![]()
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