1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
nalin [4]
3 years ago
14

A competitive firm currently produces and sells 7,500 units of output at a price of $2.50 per unit. The firm's average fixed cos

t is $0.75 and its average total cost is $2.80. A. What are the firms profits? Show your work. B. In the short run, should the firm continue to operate? Explain why. C. In the long run, should the firm continue to operate? Explain why. D. In the long run, what do you expect to happen to the market price in this industry? Explain why.
Business
1 answer:
saveliy_v [14]3 years ago
3 0

Answer:

A. $-2,250

B. The firm should continue to operate in the short run because price is greater than average variable cost

C.The firm should exit in the long run because it is making losses

D. In the long run, prices would increase because in a competitive firm, price must equal average cost. As firms exit the industry, supply would fall and this would lead to an excess of demand over supply. As a result, price would rise

Explanation:

A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

Profit = Total revenue - Total cost

( $2.50 -  $2.80) × 7,500 = $-2,250

The firm is earning a loss

A firm should shutdown in the short run if price is less than average variable cost.

Average variable cost = average total cost- average total cost

 $2.80 - $0.75 = $2.05

2.50 > 2.05 so the firm should continue to operate in the short run.

The firm should exit in the long run because it is making losses

In the long run, prices would increase because in a competitive firm, price must equal average cost

I hope my answer helps you.

You might be interested in
Jody is an agent for Kwik Credit Company (KCC). In the course of Jody's performance for KCC, Jody pays Leo for certain auto main
Serjik [45]

Answer:

D. Reimbursement

Explanation:

A principal may be defined as a company's agent dealing with a contractor. The principal has the duty to reimburse an agent for the amount of money used up while carrying out his/her duty. Reimbursement may be from expenses like cost of travelling, cost of meals, cost of lodging and so on. In other words, if an agent makes authorized spending while doing a job for the principal, the principal has the duty to reimburse the agent for the money spent.

3 0
3 years ago
Read 2 more answers
Last year, Natalie submitted her idea for a redesigned bicycle seat on the Fast Flyers Bikes website. She learned this week that
Tems11 [23]

Answer:

microblogging

Explanation:

Natalie has submitted her idea in a website. Her idea was supported by greater number of people. Natalie did not expected that her idea would gain such significance and will be voted as winning.

4 0
2 years ago
Along a straight line downward sloping demand curve, elasticity is Constant but its value cannot be determined without measureme
N76 [4]

<u>Answer:</u>

<em>(A) Constant and equal to an absolute value of one</em>

<em></em>

<u>Explanation:</u>

The elasticity is diverse at each point on a demand curve with a consistent slope. The reason is that the "slope and elasticity" are various ideas. Incline estimates the steepness or evenness of a line as far as the estimation units for cost and amount. Elasticity determines the general reaction of the number of changes in price. Elasticity is diverse for each section on the interest bend. Although the slant is steady for this straight-line request bend, Elasticity is NOT.

4 0
3 years ago
The average price of milk increased from $3.00 last year to $3.50 this year. This most likely due to:
Galina-37 [17]
The answer is: inflation
6 0
2 years ago
Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 trend percentages for net sales using 20
babunello [35]

Answer:

119.4% for 2017 and 100.0% for 2016.

Explanation:

                                                      2017                2016

Net sales                                 $276,200        $231,400

Cost of goods sold                  $151,900        $129,590

Operating expenses                $55,240         $53,240

Net earnings                             $27,820          $19,820

since we are using 2016 as a base year, the $231,400 in net sales represent 100%, so the trend percentage for 2017 = net sales 2017 / net sales 2016 $276,200 / $231,400 = 1.1936 = 119.4% or a 19.4% increase.

The base year's amount will always be 100% or 1, and the trend percentages will change relative to that year.

7 0
3 years ago
Read 2 more answers
Other questions:
  • Waygate's residential internet modem works well but is sensitive to power-line fluctuations. On average, this product hangs up a
    6·1 answer
  • Imagine that the U.S. Congress, recognizing the importance of being well dressed, started giveing preferential tax treatment to
    7·1 answer
  • Cost per click is a measure in which
    14·1 answer
  • Pereot fragrances states that they are a "moving, flexible, innovative, customer-oriented global company that delivers real valu
    7·1 answer
  • Dennis took 12 index card and wrote the number 1 -12 on them what number collected the cards,shuffled them , and drew one card f
    9·2 answers
  • For your speech to be effective, you must carefully consider what your specific
    6·1 answer
  • The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and
    14·1 answer
  • A firm had after-tax income last year of $3.0 million. Its depreciation expenses were $0.6 million, and its total cash flow was
    14·1 answer
  • Notes Receivable differ from Accounts Receivable in that Notes Receivable: Multiple Choice generally charge interest from the da
    15·1 answer
  • How are enterprise state roaming (esr) profiles different from other traditional user profiles?
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!