Question: A perfectly competitive firm faces a price of 10 and is currently producing a level of output at which marginal cost is equal to 10

A perfectly competitive firm faces a price of 10 and is currently producing a level of output at which marginal cost is equal to 10 on a rising portion of its short- run marginal cost curve. Its long- run marginal cost is equal to 12. Its short- run average variable cost is equal to 8. The minimum point on its long-run average cost curve is equal to 10. Is this firm earning an economic profit in the short run? Should it alter its output in the short run? In the long run, what should this firm do?

Step by Step Solution

★★★★★

3.49 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Since P SMC AVC the firm should continue at its current leve... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

363-B-E-M-E (3633).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

What type of demand curve does a perfectly competitive firm face? Why?

A perfect competitor can reap an economic profit in the short run but not in the long run. True False

A perfectly competitive firm faces a price of 14 per unit. It has the following short-run cost schedule: Output 0 1 2 3 4 5 6 7 8 TC () 10 18 24 30 38 50 66 91 120 (a) Copy the table and put in...

5. A perfectly competitive firm faces a price of 10 and is currently producing a level of output at which marginal cost is equal to 10 on a rising portion of its short-run marginal cost curve. Its...

A perfectly competitive firm faces a price of 10 and is currently producing a level of output at which marginal cost is equal to 10 on a rising portion of its short-run marginal cost curve. Its...

please give the solutions of these questions. (a) A Company wants to purchase a machine. There are two machines A and B available in the market details of which are given below. Decide which machine...

Please help answer these: PPF with Biased Technological Change 35 Capris 2 Pecan Pies 6. This graph shows what happens to the production possibilities frontier for pecan pies and capri pants with...

Novak Corporation purchased equipment costing $126,000 on January 1, 2021. At that time the useful life of the equipment was estimated to be 12 years and the residual value was estimated to be...

Question B1 [Soalan BI] Company B has requested the Mechatronic Engineering student to develop an offset slider crank mechanism with time ratio Q = 1.37, stroke of |AR4|max = 46 mm and time per cycle...

For a perfectly competitive firm producing 3 0 0 units of output of wheat, the following data exist: Price = $ 8 Marginal cost = $ 6 Average variable cost = $ 1 0 Average total cost = $ 1 3 What...

The following data relate to a $100,000,000, 12% bond issue for a selected semiannual interest period: Bond carrying amount at beginning of period $112,085,373 Interest paid during period 6,000,000...

If f(x) = 1n x, then f(n) (x) = (-1)n-1 (n - 1)! / xn. Thus, the Taylor polynomial of order n based at 1 for 1n x is 1n x = (x - 1) - 1 / 2 (x - 1)2 + 1 / 3 (x - 1)3 + ... How large would n have to...

4.39 Monthly Shopping and Weight The figure shows a scatterplot of the monthly shopping (in $) and weights (in kg) of some residents in a locality. a. If a regression line were drawn on this graph,...

Assuming both companies have similar equity multipliers, OldShips is most likely to have a: A. much lower ROE than CleanYards. B. similar ROE to CleanYards. C. much higher ROE than CleanYards.

A firm??s product sells for $2 per unit in a highly competitive market. The firm produces output using capital (which it rents at $75 per hour) and labor (which is paid a wage of $15 per hour under a...

Explain the difference between the law of diminishing marginal returns and the law of diminishing marginal rate of technical substitution.

An economist estimated that the cost function of a single-product firm is C(Q) = 50 + 25Q + 30 Q2 + 5 Q3 Based on this information, determine: a. The fixed cost of producing 10 units of output. b....

at an interest rate of 11 percent. Click the icon to view the table of or discrete compounding periods when i=11%. The savings would need to be at least $30170.6. (Round to the nearest cent as...

Mary Reid works as a financial advisor at Wells Fargo Wealth Management team. She is a big believer of the capital asset pricing model and often use it for making recommendations to her clients. One...

Three cards are dealt to the player. What are the chances of not receiving three hearts?