Question: Critically evaluate and explain a. A firm in a perfectly competitive market should always shut when its marginal revenue is below its average cost (

Critically evaluate and explain

a. A firm in a perfectly competitive market should always shut when its marginal revenue is below its average cost ( equivalent to average total cost)

b. The intersection of marginal revenue and marginal cost determines the quantity at which a business in a perfectly competitive market is profitable

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

A plate (k = 10W/m K) is stiffened by a series of longitudinal ribs having a rectangular cross section with length L = 8 mm and width w = 4 mm. The base of the plate is maintained at a uniform...

A firm in a perfectly competitive market should produce where marginal revenue equals Multiple Choice marginal cost. price. total revenue. average cost.

C. Should this firm produce in the short run? Why or why not? D. Will this rm earn a prot or incur a loss? Explain. 2. Assume that in a perfectly competitive market, a firm's costs and revenues are:...

Assume a perfectly competitive firm with its corresponding Marginal Revenue (MR), Average Total Cost (ATC), Average Variable Cost (AVC) and Marginal Cost (MC). Assume that the firm produces...

Question 1 What do we know about the short-run supply curve for a firm in a perfectly competitive market? Select one: a.It is likely to be horizontal. b.It is likely to slope downward. c.It is...

Please find the attached multiple choice questions: Answers and explanations please. 25. A firm in monopolistic market faces the following demand and total cost equations for its product as follows:...

For a firm in a perfectly competitive market, the price of the good is always Group of answer choices greater than average revenue. equal to total revenue. equal to the firm's efficient scale of...

CORRECTLY ANSWERSED You and your team work for an educational institution that has 5 campuses and over 40,000 students. Since March 2020, all campuses were closed due to COVID-19 virus presence in...

...Consider a forward start option which, 1 year from today, will give its owner a 1-year European call option with a strike price equal to the stock price at that time. You are given: (i) The...

AutoSave OFF A A CG ... Module_08_Perfect_Competition_Problems - Saved to my Mac OP Home Insert Draw Design Layout References Mailings Review View Table Design Layout ? Tell me Comments Editing Share...

Bryan operates his business as a C corporation. He is the only shareholder. The accumulated E & P is $800,000. Starting next year, he plans on distributing $200,000. In future years, he intends to...

Beginning balances in the equity accounts were as follows: Common stock, at par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500 Paid-in capital in excess of par...

The _ _ _ _ _ _ _ _ _ _ run is a time period too brief to increase capacity, but sufficient to increase operations to the maximum of the existing capacity . short medium long none of the above

On January 2, 20Y7, Mikedes Company acquired 30% of the outstanding stock of Violet Company for $720,000. For the year ended December 31, 20Y7, Violet Company earned income of $190,000 and paid...

December 31, 20X5 Posey Company acquired 90% of Stargell Corporation's outstanding common stock for $1,116,900. On that date: ? The fair value of the noncontrolling interest was $124,100; ? Stargell...

Suppose that the mean daily viewing time of television is 8.35 hours. Use a normal probability distribution with a standard deviation of 2.5 hours to answer the following questions about daily...

Why is it important to examine models of central tendency and models of variability when trying to understand your data?

Kelley was admitted to University Hospital as an emergency heart transplant patient. The next day, the hospitals business manager discussed the cost of the surgery with Kelleys two sons. Both sons...

Write a program to wish happy birthday to a student. Firstly, take today month and day as an input and secondly take birthday as an input in the form of month and day. If the input day and month...

2. Find five metaphors for communication.

5. Starting with a motive you may have for acting the way you do in a particular situation: a) What purpose did you seek to achieve? b) Which aspects of your past and your surroundings influenced...

3. (Constructing a metaphor about something can be done by comparing it to something else by using the word is. For instance, Communication is a bridge between people.