Question 1

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

Accepted Answer

The answer of What happens to a firm's profit-maximizing level...

Question 2

The long-run supply curve for a constant-cost industry is

Accepted Answer

In a constant-cost industry, the cost of producing each unit of output remains the same, regardless of the quantity produced. This means that as the market demand for the product increases, new firms will enter the market, and existing firms will increase their production levels, but the cost of production for each firm will not change. As a result, the long-run supply curve will be horizontal, indicating that firms can supply any quantity of output at the constant cost of production.

Question 3

Recall the Application about the price and supply of blueberries to answer the following question(s).
-According to the Application,the blueberry industry is roughly a(n)

Accepted Answer

The answer of Recall the Application about the price and...

Question 4

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Accepted Answer

In a constant-cost industry, the prices of the inputs used in production do not change as the industry expands. This implies that the industry can expand without any increase in production costs. Therefore, the industry is able to maintain its level of efficiency and productivity as it grows.

Question 5

Explain how a competitive industry's long-run supply curve can be positively sloped.

Accepted Answer

The answer of Explain how a competitive industry's long-run supply...

Question 6

Wheat is produced in a perfectly competitive market.Market demand for wheat increases.This will cause the individual wheat farmer's marginal revenue to ________ and his profit-maximizing level of output to ________.

Accepted Answer

In a perfectly competitive market, an increase in market demand leads to higher prices and higher marginal revenue for individual farmers. Consequently, to maximize profits, a farmer would increase output.

Question 7

The long-run supply curve can be used to determine the long-run price after an increase in demand.

Accepted Answer

The long-run supply curve shows the relationship between the price of a good or service and the quantity supplied in the long run, when all inputs can be varied. If there is an increase in demand, in the long run, firms will have enough time to adjust their inputs and increase their production. This will shift the long-run supply curve to the right, indicating that at any given price, a larger quantity will be supplied. The intersection of the new long-run supply curve and the demand curve will determine the new long-run equilibrium price. Therefore, the long-run supply curve can be used to determine the long-run price after an increase in demand.

Question 8

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

Accepted Answer

The answer of Comment on the following statement: "When firms...

Question 9

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

Accepted Answer

In a constant-cost industry, when demand increases, the supply can be increased without increasing the per unit cost of production. Thus, in the long run, the industry can supply the additional demand at the same price of $50, maintaining the long-run equilibrium price.

Question 10

Explain the relationship between price,short-run marginal cost,short-run average cost,and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

Accepted Answer

The answer of Explain the relationship between price,short-run marginal cost,short-run...

Question 11

If there is an increase in demand in the long run for an increasing-cost industry,the market price will fall.

Accepted Answer

In an increasing-cost industry, the cost of producing each unit of output increases as the industry expands. If demand increases in the long run, firms will have to pay higher costs to produce the same quantity of output, which will lead to higher prices rather than lower prices. Therefore, the statement is false.

Question 12

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Accepted Answer

After a natural disaster like Hurricane Andrew, the demand for ice generally increases due to the need for preservation of perishable foods and for cooling down in the absence of electricity. However, the supply of ice may be disrupted due to damages to infrastructure and transportation. This leads to a rise in the price of ice in the short run.

Question 13

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing ________ bushels of soybeans and her profit will be ________.

Accepted Answer

In a perfectly competitive industry, if the market price of soybeans falls, the farmer will lower their production to reach the point where the marginal cost equals the new market price, thus they will be producing fewer bushels of soybeans. Since the market price has decreased, the total revenue will also decrease, but the total cost may not decrease as much, causing the profit to fall. Therefore, the farmer's profit will be lower.

Question 14

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

Accepted Answer

In a decreasing-cost industry, increased demand will result in larger economies of scale and lower production costs. As firms are able to produce and sell more units at a lower cost, they can lower their prices and maintain their profit margins. Therefore, the market price will tend to fall when there is an increase in demand in a decreasing-cost industry.

Question 15

Toothpicks are sold in a perfectly competitive market.The market price is currently $3 per box of one hundred toothpicks.At its current level of production,a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is $3.25 per box of one hundred toothpicks.Given this information,is the toothpick industry in equilibrium? Explain.

Accepted Answer

The answer of Toothpicks are sold in a perfectly competitive...

Question 16

Recall the Application about the price and supply of blueberries to answer the following question(s).
-Recall the Application.If the quantity of blueberries demanded decreases,prices ________ in the short run and ________ as supply drops to meet demand.

Accepted Answer

When the quantity of blueberries demanded decreases, prices fall in the short run due to the excess supply. Over time, as suppliers adjust to the lower demand by reducing the quantity supplied, the market stabilizes at a new equilibrium with lower prices.

Question 17

A constant-cost industry in the long run faces a

Accepted Answer

A constant-cost industry means that input prices and technology remain unchanged in the long run. As a result, firms continue to produce at the same cost levels, leading to a flat average cost curve. Therefore, the correct choice is D.

Question 18

Sara sells beer in a perfectly competitive market.This week Sara receives a lower price for a keg of beer than she did last week.Which of the following statements could explain this?

Accepted Answer

When the market demand for beer decreases, the price Sara receives for a keg of beer will also decrease, as there is less demand for it.

Question 19

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

Accepted Answer

The answer of In the long run,after Hurricane Andrew struck...

Question 20

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

Accepted Answer

If consumers switch from beef to chicken, the demand for beef will decrease, leading to a decrease in the price of beef. This will cause beef producers to earn economic losses in the short run. Some producers will exit the industry until those remaining are earning a zero economic profit. In the long run, the supply of beef will decrease, leading to an increase in price until producers are earning a zero economic profit again.

Quiz 9: Perfect Competition

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

The long-run supply curve for a constant-cost industry is

Recall the Application about the price and supply of blueberries to answer the following question(s) . -According to the Application,the blueberry industry is roughly a(n)

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Explain how a competitive industry's long-run supply curve can be positively sloped.

Wheat is produced in a perfectly competitive market.Market demand for wheat increases.This will cause the individual wheat farmer's marginal revenue to and his profit-maximizing level of output to .

The long-run supply curve can be used to determine the long-run price after an increase in demand.

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

Explain the relationship between price,short-run marginal cost,short-run average cost,and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

If there is an increase in demand in the long run for an increasing-cost industry,the market price will fall.

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing bushels of soybeans and her profit will be .

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

Recall the Application about the price and supply of blueberries to answer the following question(s) . -Recall the Application.If the quantity of blueberries demanded decreases,prices in the short run and as supply drops to meet demand.

A constant-cost industry in the long run faces a

Sara sells beer in a perfectly competitive market.This week Sara receives a lower price for a keg of beer than she did last week.Which of the following statements could explain this?

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

Quiz 9: Perfect Competition

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

The long-run supply curve for a constant-cost industry is

Recall the Application about the price and supply of blueberries to answer the following question(s) . -According to the Application,the blueberry industry is roughly a(n)

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Explain how a competitive industry's long-run supply curve can be positively sloped.

Wheat is produced in a perfectly competitive market.Market demand for wheat increases.This will cause the individual wheat farmer's marginal revenue to ________ and his profit-maximizing level of output to ________.

The long-run supply curve can be used to determine the long-run price after an increase in demand.

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

Explain the relationship between price,short-run marginal cost,short-run average cost,and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

If there is an increase in demand in the long run for an increasing-cost industry,the market price will fall.

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing ________ bushels of soybeans and her profit will be ________.

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

Recall the Application about the price and supply of blueberries to answer the following question(s) . -Recall the Application.If the quantity of blueberries demanded decreases,prices ________ in the short run and ________ as supply drops to meet demand.

A constant-cost industry in the long run faces a

Sara sells beer in a perfectly competitive market.This week Sara receives a lower price for a keg of beer than she did last week.Which of the following statements could explain this?

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

Wheat is produced in a perfectly competitive market.Market demand for wheat increases.This will cause the individual wheat farmer's marginal revenue to and his profit-maximizing level of output to .

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing bushels of soybeans and her profit will be .

Recall the Application about the price and supply of blueberries to answer the following question(s) . -Recall the Application.If the quantity of blueberries demanded decreases,prices in the short run and as supply drops to meet demand.