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
SVETLANKA909090 [29]
3 years ago
7

The following is a free response question released by the College Board from a previous AP exam to be used as practice for futur

e exams. You can complete the assignment in this document, using the drawing tools in Word (or any photo editing program) or print this document, and complete the activity by hand, submitting a scan or photo of your work. When you are done, submit the assignment for grading by your instructor. This question will be graded out of 7 points.
1. Assume that two firms are operating with identical cost schedules, but one firm is in a perfectly competitive industry and the other is in a monopolistically competitive industry.

(a) Using two correctly labeled graphs, show the long-run equilibrium price and output levels for each of these two firms.

(b) Compare the long-run equilibrium price and output levels for these two firms.

(c) What level of economic profit will each firm earn in the long run? Why do these results occur?

(d) For each of the two firms at the equilibrium quantity, indicate whether the firm’s demand curve is perfectly elastic, inelastic, unit elastic, inelastic, or perfectly inelastic. How can you tell?

Business
1 answer:
astraxan [27]3 years ago
5 0

<u>Solution and Explanation:</u>

(a). Firm in perfect competition produces at minimum efficient scale, MEC where average cost AC is minimum. The price is determined by the market supply and demand.

(b) Note that q1 is at the minimum of AC while Q* is to the left of q1. Similarly, P1 is equal to MC while P* is higher than MC. This shows that firms in perfect competition produce more and charge less than the firms in monopolistically competitive market.

(c) All firms in monopolistically competitive market as well as perfectly competitive market earn zero economic profit in the long run. This is because there is a free entry and exit

(d) Demand is steeper for firms in monopolistically competitive market so that demand is elastic. Demand is horizontal for any quantity which means it is perfectly elastic for a firm in competitive market.  

You might be interested in
What is an extrinsic value​
MAVERICK [17]

Answer:

Extrinsic value is the portion of the worth that has been assigned to an item by external factors.

Hope this helped a little!

3 0
3 years ago
The demand function is given by
Jlenok [28]

Answer:

Q=120−4P

Explanation:

putting P = 20 we get

q= 40

we know that elasticity is quantity demanded / price  

20

40

​  

=2

hence the correct option: D

5 0
3 years ago
Assume that investors can borrow and lend at risk-free rate of 5%. The optimal tangent portfolio on the efficient frontier has a
gizmo_the_mogwai [7]

Answer:

B. Portfolio B with E(R)=13% and STD=18%

Explanation:

The computation is shown below;

Reward to risk ratio = (15% - 5%) ÷ 20% = 0.5

The porfolio should be in line i.e.

= 0.05 + 0.5 × standard deviation

For portfolio A

= 0.05 + 0.5 × 25

= 17.5%

For portfolio C

= 0.05 + 0.5 × 1

= 5.5%

Portfolio B, the std is 18%

So,

= 0.05 + 0.5 × 18%

= 14%

5 0
2 years ago
Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be
sleet_krkn [62]

Answer:

$5,175

Explanation:

The computation of the amount after 8 month is as follows

As we know that

Amount = Principal × (1 + interest rate × number of days ÷ total number of days)

where,

Principal = $5,000

Interest rate = 5.25%

Number of days = 30 days × 8 months = 240 days

And, the total number of days = 360 days

So, the amount after 8 months is

= $5,000 × (1 + 5.25% × 240 days ÷ 360 days)

= $5,000 × 1.035

= $5,175

8 0
3 years ago
Jon enjoys fishing (which costs $20) and golf (which costs $30). last month, jon fished four times and golfed twice. the last fi
Gennadij [26K]
He did maximize the utility <span>according to the utility maximization rule</span>.

6 0
3 years ago
Other questions:
  • Company XYZ is looking for a Finance/Accounting intern. The student filling this position will handle a wide range of important
    15·1 answer
  • The kiwanis club sold citrus fruit to raise money for their scholarship fund. a box of oranges costs $21 and a box of grapefruit
    14·2 answers
  • Which two types of jobs are provided in the work-study program?
    10·2 answers
  • Nutritional Foods reports merchandise inventory at the lower of the cost or market. Prior to releasing its financial statements
    7·1 answer
  • Suppose a state passes a minimum wage law that increases the minimum wage from $5/hour to $20/hour. The equilibrium wage prior t
    10·1 answer
  • You purchased 200 shares of ABC stock on July 15th. On July 20th, you purchased another 100 shares and then on July 22st you pur
    6·1 answer
  • Does inflation benefit the lender or borrower?
    14·1 answer
  • For a manufacturer, measures of volume may include:
    10·2 answers
  • Kela Corporation reports net income of $470,000 that includes depreciation expense of $83,000. Also, cash of $44,000 was borrowe
    14·1 answer
  • Hi what up peolpe############################
    11·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!