Refer to the graph of the costs for a perfectly competitive firm. Which of the following best represents profit per unit of output? OA. the market price OB. the shaded rectangle OC. the distance between points A and B OD. None of the above. Which of the following best represents total profit? OA. the shaded rectangle OB. the market price OC. the distance between points A and B OD. None of the above. Quantity MC ATC D = MR C

Refer to the graph of the costs for a perfectly competitive firm. Which of the following best represents profit per unit of output? OA. the market price OB. the shaded rectangle OC. the distance between points A and B OD. None of the above. Which of the following best represents total profit? OA. the shaded rectangle OB. the market price OC. the distance between points A and B OD. None of the above. Quantity MC ATC D = MR C

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

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QUESTION 41 Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: 10 9 8 7 3.5 6 ↑Price 3+ 1 2 3 4 5 MC 6 7 8 ATC AVC Quantity Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run? O a. Because the price is below the firm's average variable costs, the firms will shut down. O b. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. O c. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. O d. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
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If Doug's Dry Cleaners operates in a perfectly competitive market, and its shutdown price is $12/shirt, what does this firms short run supply curve look like? Select one: a. starting from price at which Doug starts making some economic profit, the short run supply curve is his MC curve. O b. it is an upward sloping curve starting at origin C Doug supplies nothing up to $12/shirt; after that it is his MC curve d. Doug supplies nothing up to $12/shirt; after that it is his AVC curve e. None of the answers offered are accurate.
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