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3 years ago

Why do single firms in perfectly competitive markets face horizontal demand curves?

Business

1 answer:

Svetradugi [14.3K]3 years ago

7 0

Answer:

Because increasing price will cause the demand to become zero.

Explanation:

In a perfectly competitive market, there is a large number of buyers and sellers. Such that no single buyer or seller can affect the market price. There is no restriction on entry and exit of firms and perfect knowledge is freely available.

The sellers in this market sell homogenous products, so if a seller charges a higher price, the buyers will instead buy from its rivals. And if the firm reduces its price it will face losses. So the individual demand curve of a firm or supplier is a horizontal line on the level of market equilibrium price.

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The Azuza Company owns no plant assets and had the following income statement for the year:

Nutka1998 [239]

Answer:Please see answer below

Explanation:

Solving

Net income= $16,000

Change in asset and liabilities

Accounts receivable Increased $67,000- $59,000 =- -8000

Inventory Decreased 62,000- 86,000=24,000

Prepaid rent --Increased 9,000- 7,000 = -2000

Accounts payable ---decreased 22,000 -30,000 = -8000

Wages payable ----Increased 9,000- 7,000=2000

Net cash provided by operating activity.=24,000+ 2000-(8000+2000+8000)

= $24,000

Net income= $16,000

Change in asset and liabilities

Accounts receivable--Increase -$8,000

Inventory--Decreased-- $24,000

Prepaid rent --Increased -$2,000

Accounts payable ---decreased-$8,000

Wages payable ----Increased $2,000

Net cash provided by operating activities,= $24,000

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3 years ago

The perfectly competitive firm's short-run supply curve is the Group of answer choices upward-sloping portion of its average tot

allochka39001 [22]

Answer:

Portion of its marginal cost curve that lies above its average variable cost curve.

Explanation:

This is explained to be the portion of its marginal cost curve because marginal gross benefits exceeds marginal cost, the firm can earn greater profits by increasing its output.

These profits are been maximized by choosing to supply the level of output where its marginal revenue equals its marginal cost. When this revenue is below the said marginal cost, money is lost, and consequently, it must reduce its output. Profits are however utilized when the firm chooses the level of output where its marginal revenue equals its marginal cost.

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4 years ago

What is the 2016 repayment limitation for a single taxpayer who has income at a 350% poverty level?

GarryVolchara [31]

I'm assuming single means non-married, in that case your max repayment would be $1,250

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4 years ago

Univisión’s market appeal is most specifically aimed toward the ________________ market.

mezya [45]

Univision's market appeal is most specifically aimed toward the HISPANIC market.

Hispanic or Latino according to the U.S. Census Bureau is an individual who is of Cuban, Mexican, Puerto Rican, South or Central American, or any Spanish origin or culture".

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3 years ago

Read 2 more answers

In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired reserve/deposit ratio is

kotegsom [21]

Answer:

the money supply in Macroland will increase from <u>5,000</u> econs to <u>7,000</u> econs

Explanation:

Currently, Macroland's money supply = 2,000 econs held by the public and 3,000 econs held by the banks (= 300 econs x 1/0.1).

In order to determine the increase in the money supply we must multiply the inflow of econs by the money multiplier. The money multiplier = 1 / reserve ratio = 1/0.1 = 10.

Since the government is injecting 200 econs to the economy, the increase in the money supply = 200 econs x 10 = 2,000 econs.

So now, Macroland's money supply will increase from 5,000 to 7,000 econs.

The money multiplier measures the banking system's ability to "create" money. The banking system creates money by first receiving deposits, e.g. you deposit 10 econs in your savings account, and then lending money to another client. The bank will lend 9 econs (-10% required reserve) to John that will purchase a bike. The seller of the bike receives the money form John and deposits the 9 econs in his own bank. Then this second bank will lend 8.10 econs to Sarah. Sarah will use the money to purchase a new computer and a printer from Tom. Tom then deposits the money in his bank, and then his bank lends 7.29 econs to Sally, and the wheel goes on and on.

This money creating process is possible because Macroland uses a fractional banking system, which means that the banks are only required to keep a fraction of total deposits as reserves.

7 0

4 years ago

Why do single firms in perfectly competitive markets face horizontal demand​ curves?

Why do single firms in perfectly competitive markets face horizontal demand curves?