01 Jun uestion 1. award: 6.25 out of 6.25 points Question and Exercise 13-2
uestion
1.
award:
6.25 out of
6.25 points
Question and Exercise 13-2
List three conditions for perfect competition.
Instructions:You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.
Firms’ products are differentiated.
There are no barriers to entry.
There are high barriers to entry.
Both buyers and sellers are price takers.
There is only one firm that makes up the entire market.
Firms’ products are identical.
Firms engage in strategic decision making.
2.
award:
6.25 out of
6.25 points
Question and Exercise 13-5
A perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity produced, how much does the firm produce? Why?
Worksheet
Learning Objective: 13-02 Explain why producing an output at which marginal cost equals price maximizes total profit for a perfect competitor.
268
Question and Exercise 13-5
Section: The Profit-Maximizing Level of Output
3.
award:
6.25 out of
6.25 points
Question and Exercise 13-5 (algo)
A perfectly competitive firm sells its good for $33. If marginal cost is eleven times the quantity produced, how much does the firm produce? Why?
Worksheet
Learning Objective: 13-02 Explain why producing an output at which marginal cost equals price maximizes total profit for a perfect competitor.
268
Question and Exercise 13-5 (algo)
Section: The Profit-Maximizing Level of Output
4.
award:
6.25 out of
6.25 points
Question and Exercise 13-6
The following graphs (A?C) show the marginal cost, marginal revenue, and average total cost curves for a typical perfectly competitive firm.
a. Identify the profit-maximizing level of output for each firm in graphs A?C.
Instructions: Use the tool ‘Q’ to label the profit-maximizing level of output for each firm.
b. Which of the above graphs represents a typical perfectly competitive firm earning economic profits?
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c. Which of the above graphs represents a typical perfectly competitive firm earning economic losses?
d. Which of the above graphs represents a typical perfectly competitive firm earning zero economic profit?
.
e. Which of the above graphs represents a typical perfectly competitive firm in the long run?
.
Explanation:
The profit-maximizing level of a competitive firm is where marginal revenue equals marginal cost. To find the profit-maximizing level of output for a perfect competitor, find that level of output where MC = MR. Profit is price less average total cost times output at the profit-maximizing level of output. Perfectly competitive firms make zero profit in the long run.
5.
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