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tiny-mole [99]
3 years ago
9

If price is greater than average variable cost and less than average total cost at the profit-maximizing quantity of output in t

he short run, a perfectly competitive firm will:
Business
1 answer:
navik [9.2K]3 years ago
8 0

Answer:

produce at an economic loss.

Explanation:

In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.

This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.

In a perfectly competitive market in long-run equilibrium, a long-run equilibrium avails firms the opportunity to adjust all inputs and all fixed costs are maximized. Also, it's characterized by free entry and exit, as such there isn't a fixed number of firms. This simply means that, since the number of firms in a long-run equilibrium can change, a firm must exit the market as a result of losses i.e when the firm is unable to cover its fixed costs in the long-run while new firms are allowed entry into the market when it anticipates potential profits or gains.

However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.

In a nutshell, in the long run equilibrium P=MR=MC and P=AC.

Hence, if price is greater than average variable cost and less than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will produce at an economic loss.

Additionally, Average Total Cost (ATC) can be defined as the overall cost of production divided by total output of production. It is calculated by dividing total cost by total output of production or by adding TVC and TFC.

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Answer:

b) 4,000 + 5 x 1,000

Explanation:

The cost of 1000 items will be the total of

1). the set up cost

2). The per item cost multiplied by 1000 units

Therefore, the cost function will

=set up cost($4000 )  + cost of 1000 items( $5 x 1000)

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4 0
3 years ago
Comparative advantage can be measured by:
grigory [225]

Answer: To determine comparative advantage you have to calculate per unit opportunity cost using the formula give up/gain (the amount of good you are giving up divided by the amount of good you are gaining). Once you have calculated per unit opportunity cost, the country with the lowest one has a comparative advantage

7 0
2 years ago
A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, ____
AleksandrR [38]

Answer:

Fixed Cost and Variable cost

Explanation:

it is the Variable  cost that consist of firm's expenditures made before production while fixed cost comes regardless of the level of production.

7 0
3 years ago
a company has sales of $119,000; cost of goods sold of $74,870; and total direct expenses of $8,620. the department’ contributio
arsen [322]

The department’ contribution to overhead is $35510.

<h3>How to calculate the department contribution to overhead?</h3>

Given, sales= $119,000;

cost of goods sold= $74,870;

total direct expenses= $8,620.

Gross profit = Sales - (COGS + Direct expenses)

Gross profit = $119,000 - ($74870 + $8620)

Gross profit = $35,510.

<h3>What are direct expenses?</h3>

Direct costs, commonly referred to as costs of goods sold (COGS), are expenses that are entirely attributable to the creation of a particular commodity or service. These expenses cover the direct costs of the materials required to make the product as well as maybe any labor charges that are utilized only to make the product.

To know more about gross profit, visit:

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6 0
1 year ago
Match each type of savings account with its features
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8 0
3 years ago
Read 2 more answers
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