Economics Problems<\/p>\n
Part I
\nGive an example not mentioned in the book or lesson of an industry from which firms exited because profits were low.
\nGive an example not mentioned in the book or lesson of an industry into which firms entered because profits were low.
\nCreate a pair of graphs to show an perfectly competitive industry and firm in long-run equilibrium. Put the graphs side by side and use the same vertical scale for both graphs.
\nThe left-hand side should show the supply and demand for the product. The equilibrium price is $25 and the equilibrium quantity is 20 billion units per week.
\nThe right-hand side should show the average total cost, marginal cost, and demand curves facing the individual firm. The profit maximizing quantity is 500 units per week.
\nHow many firms are in the market given the graphs you constructed? Assume that all firms have identical cost curves.<\/p>\n
Number of firms = _________
\nWhen economic profit equals zero in a perfectly competitive market, in the long run the number of firms
\nIncreases
\nDecreases
\nRemains constant
\nExplain why your answer is correct.<\/p>\n
Part II<\/p>\n
Q ATC AVC MC
\n4 42.25 12.25 5
\n5 35.2 11.2 7
\n6 30.83333333 10.83333333 9
\n7 28 10.85714286 11
\n8 26.125 11.125 13
\n9 24.88888889 11.55555556 15
\n10 24.1 12.1 17
\n11 23.63636364 12.72727273 19
\n12 23.41666667 13.41666667 21
\n13 23.38461538 14.15384615 23
\n14 23.5 14.92857143 25
\n15 23.86666667 15.86666667 29
\n16 24.4375 16.9375 33
\n17 25.17647059 18.11764706 37
\n18 26.05555556 19.38888889 41<\/p>\n
Use the cost data in L16b-IA, Costs. It contains average total cost, average variable cost, and marginal cost for a perfect competitor are output increases from 4 to 18.<\/p>\n
Plot the average variable cost, average total cost, and marginal cost curves.<\/p>\n
Use the graph to identify the quantity that maximizes profit when the market price is $25.<\/p>\n
Shade the area on the graph that equals profit when the market price is $25.<\/p>\n
When is the maximum profit greater than $0?<\/p>\n
The maximum profit is greater than $0 when the market price is above $_____<\/p>\n
Pick a price that is greater than a, your answer to 4, and less than $41. The price must be an even number.<\/p>\n
Price = b = $____<\/p>\n
Use the table to identify the quantity that maximizes profit when price = b.<\/p>\n
Q = ___<\/p>\n
Use the table to calculate the maximum profit when price = b. Profit = $____<\/p>\n
Is the industry in long-run equilibrium when price = b?
\nYes
\nNo
\nExplain why or why not. If the industry is not in long-run equilibrium, describe what changes would occur in the long run and why.<\/p>\n
When will the firm produce output in the short run AND suffer economic loss? Profit will be negative and the firm will not shut down when price is between c = $___ and d = $___.<\/p>\n
Pick a price between c and d. The price must be an even number.<\/p>\n
Price = e = ____<\/p>\n
Use the table to identify the quantity that maximizes profit when price = e.<\/p>\n
Q = ___<\/p>\n
Use the table to calculate the minimum loss when price = e. Loss = $____<\/p>\n
Is the industry in long-run equilibrium when price = e?
\nYes
\nNo
\nExplain why or why not. If the industry is not in long-run equilibrium, describe what changes would occur in the long run and why.
\nWhy doesn\u2019t the firm shut down when price = e? Explain your answer carefully.<\/p>\n
When will the firm shut down in the short run? The firm will shut down when price<\/p>\n
is below $___.<\/p>\n
What loss does the firm suffer when it shuts down? Loss = ____<\/p>\n","protected":false},"excerpt":{"rendered":"
Economics Problems Part I Give an example not mentioned in the book or lesson of an industry from which firms exited because profits were low. Give an example not mentioned in the book or lesson of an industry into which Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-239448","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/239448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=239448"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/239448\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=239448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=239448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=239448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}