Look at the Graph from Next Assignment Revised Part 1 to answer the following 7.

Question

Look at the Graph from Next Assignment Revised Part 1 to answer the following

7. At profit-maximizing output, what four letters indicate:

8. If price falls below what point, this firm will not operate in the short run? (No letter needed, just an explanation.)

9. What will happen to this firm’s price, output, and economic profit in the long run? Why?

10. Where will the price settle in the long run? Remember, all purely competitive firms are theoretically doomed to make only normal profit in the long run. (Again, no letter answer, just an explanation.)

11. Why is the long-run equilibrium position of a purely competitive firm productively and allocatively efficient?

Explanation / Answer

7.)The total revenue should be the box with the output and revenue (price) as ends, cost will be output and cost (price), total economic profit will the box between revenue and cost extending to the output.

8.) Average Variable Cost.

9.) Difficult to determine without graph, but the economic profit should diminish as competition increases over the long run.

10.) Price should settle at the point at which MR=MC or the point where demand=supply, same deal.

11.) Long run equilibrium is productively efficient because the firms are producing exactly what the need to be profit maximizing. It is allocatively efficient since in the long run the scarce resources are able to be used in a efficient manner that the market needs and has accurately priced.

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.