Heloise and Abelard produce letters in a perfectly competitive industry. Heloise is much better at it than Abelard: Onaverage, she produces letters for half of the cost of Abelard's.a. True or False: If Heloise and Abelard are both maximizing profit, the last letter that Heloise produces will costhalf as much as the last letter written by Abelard. Explain your answer.b. Suppose Heloise and Abelard both produce until their last letter costs them $5 to produce. True or False: Becausethe cost of their last letter is the same, nobody will earn any economic rent.

Let's tackle each problem:a. True. In a perfectly competitive market, each firm will produce up to…

Answered: Heloise and Abelard produce letters in…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 12P

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Rambutan is a fruit prized in Eastern Asia for its unique hairy look. Once peeled, it reveals a sweet, slightly sour, grape-like, gummy-tasting fruit. The graph shows the average total cost, marginal revenue, and marginal cost curves of a perfectly or (purely) competitive rambutan farmer. This firm is incurring a firms will this market. In the long run, What is this firm's profit or loss, rounded to the nearest penny? If the market price fell to $9.51, the firm would Price per bushel $12.11 10.11 9.51 MR C 5.4 A MC B ATC 7 Quantity (bushels)
The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a purely competitive firm producing different quantities of chocolate gift boxes. The market price for a box of chocolates is $10 per box. Instructions: Enter your answers as a whole number. a. Fill in the marginal revenue (MR) and average revenue (AR) columns. Choco Lovers Cost and Revenue Quantity TC MC MR AR of Gift Boxes ($) ($) ($) ($) 25 205 7 30 237 6.50 35 272 7 40 312 8 45 362 10 50 422 12 Instructions: For profit/loss, round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. A loss should be entered as a negative number. b. Given a price of $10 per gift box, how many boxes of chocolate should Choco Lovers produce? gift boxes What will the profit or loss be per gift box? $ per gift box c. Suppose that Choco Lovers raises the price to $12 per gift box. Now how many boxes should Choco Lovers produce? gift…
The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a purely competitive firm producing differe quantities of chocolate gift boxes. The market price for a box of chocolates is $4 per box. Instructions: Enter your answers as a whole number. a. Fill in the marginal revenue (MR) and average revenue (AR) columns. Choco Lovers Cost and Revenue Quantity TC MC MR AR of Gift Boxes ($) ($) ($) ($) 55 1 10 57 0.50 15 62 1 20 72 25 92 4 30 122 6.
a. John operates a firm producing t shirts. There are many such firms producingidentical products to John. What market structure is this? Is it possible for John tomake a profit in the long run? Illustrate using an appropriate diagram. b. John decides to innovate his business and begins printing t shirts with customercreated content. Will John be able to make a profit in the short run and the longrun? Explain using relevant diagrams and comment on the implied market c. Provide a strategy for John to make greater than normal profits in the long run. Isthis likely to be the case in the market for this good?
Does L&P earn positive economic profit if it produces the allocatively efficient quantity? Explain.
Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. Suppose Hi-Tech's patent prevents other firms from using the new technology. Which of the following statements are true about what happens in the short run? Check all that apply. O Hi-Tech's average-total-cost curve shifts downward. O Hi-Tech's profits increase. The price of books remains the same. O Hi-Tech's marginal-cost curve remains the same.
What price will a perfectly competitive firm end up charging up the long run? Why?
Now consider any perfectly competitive market and suppose there are 'n' firms in the market in the long-run initially, but then the product becomes super-trendy and demand doubles. How many (new) firms enter the market? Whydon’t you need to know the cost and demand curves?
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Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the marginal and average total costs of producing candy canes by $0.05. Based on the information given, we can conclude that in the short run a typical producer of candy canes will be making:Choose one answer.a. an economic profit.b. zero economic profit.c. negative economic profits.d. It is impossible to determine based on the information given.
As fast as you can please! Adrian decides to open a new ready-to-wear skirts brand. While making his study, he noticed that his fixed cost of production is 120 dollars. Following the information.Jacob wants to do a marginal analysis to help him decide if he shall enter the market. a. Define and find the shut-down price and the shut-down quantity for Jacob’s firm Explain the way you identify these two values. b. Find the marginal revenue and determine the quantity that maximizes Jacob’s output? Explain your answer and provide the formula. c. According to your calculations, what is your advice for Jacob? Should he stay or leave the market? Explain your answer. d. Calculate the value of the profit realized by the firm.
By making use of graphs explain the difference between perfect competition andmonopoly market. Indicate how each of these two markets maximize their profits

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