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a_sh-v [17]
3 years ago
7

You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its pri

ce, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?
a. P < MC, P > ATC
b. P > MC, P < ATC
c. P = MC, P > ATC
d. P > MC, P = ATC
Business
1 answer:
Naddik [55]3 years ago
5 0

Answer:

a. not maximizing profit, reduce output, not in long run equilibrium, new firms will enter till P=ATC

b. may or may not be maximizing profit, not in long run equilibrium, having loss in long run, firms will exit till P=ATC

c. The firm is not maximizing profit, can reduce output to increase profit, not in long run equilibrium, new firms enter till P=ATC

d. May or may not be maximizing profit, in long run equilibrium as P=ATC, no incentive to enter or exit, zero economic profits

Explanation:

For profit maximization the marginal revenue should be equal to marginal cost. Here, price is less than marginal cost, and marginal revenue is lesser than price. This means marginal revenue is less than marginal cost.

If price is above marginal cost, but marginal revenue is less than price. This marginal revenue may be above below or equal to marginal cost. in that case firms may or may not be in equilibrium.

If price equals marginal cost, since the marginal revenue is less than price. It is also less than marginal cost. So profit is not maximized.

For long run equilibrium, price should be equal to average total cost.

If price is greater than ATC, firms will be having profits which will attract other potential firms to enter the market. This will increase the supply, consequently price will fall and so will profit. This process continues till P=ATC.

Similarly, if price is less than ATC, firms will be having losses in the long run. The firms having losses will exit reducing supply. The price level will rise and so will profits. This continues till P=ATC.

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3 years ago
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gregori [183]

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3 0
2 years ago
All of the following can be used as an allocation base for calculating factory overhead rates except a.direct labor hours b.mach
liq [111]

Answer:

The correct answer is C. Total units produced.

Explanation:

The following five bases are generally used in calculating the application rate of manufacturing overhead:

1. Production units

2. Direct material cost

3. Direct labor cost

4. Hours of direct labor

5. Machine hours

When he mentions the Production Units, he refers to the product or merchandise produced by the company, that is, what is intended for sale, in which this method is used is very simple, since the information on the units produced is readily available. to apply indirect manufacturing costs. It is based on the unit of finished product.

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The demand curve of a monopolistically competitive firm is _________________ than that of a perfectly competitive firm. g
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3 years ago
Langston will pay $575 to three different credit cards: Expert Card, Passport, and US Speedy. She will pay three times as much t
Gre4nikov [31]

Answer:

$75

Explanation:

Let, the payment made towards US Speedy credit card be 'U'

Therefore,

According to the question:

Payment made towards Express credit card, E = 3U

Total for the two cards = U + E

= U + 3U

= 4U

also,

Payment made towards passport credit card = 15% of 4U

= 0.15 × 4U

= 0.6U

Given: Total payment made = $575

Therefore,

E + U + 0.6 U = $575

or

3U + U + 0.6U = $575

or

4.6U = $575

or

U = $125

Hence,

Payment made towards passport credit card = 0.6U

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= $75

6 0
3 years ago
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