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Please choose ( True or False or uncertain((( the teacher wantthe s answer with valid reasoning. please explain in details for each. Thanks

1) A profit-maximizing entrepreneur will minimize costs for a given output rather than maximizing output for a given cost.

2) A firm in a competitive industry has marginal revenue which depends on the shape of the consumers' demand curve.

3) In a competitive industry, the price elasticity of the aggregate industry supply curve will always be greater than or equal to the price elasticity of the supply of any individual firm.

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Retselisitsoe Pokothoane
Retselisitsoe PokothoaneLv10
28 Sep 2019

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Related questions

Suppose you are given the following information about a particular PERFECTLY COMPETITIVE INDUSTRY:

The market demand curve is Q = 6500 - 100P

The market supply curve is Q = 1200P

You are also given the following information about a single PERFECTLY COMPETITIVE FIRM that operates in this industry:

The total cost function for the firm is TC = 722 + (Q^2 /200)

The marginal cost for the firm is MC = (2Q/200)

a. Calculate the profit-maximizing level of output for the individual firm and the price they charge.

b. Would you expect to see entry into or exit from this industry in the long-run? EXPLAIN YOUR REASONING. In addition, CALCULATE the price at which entry into or exit from the industry will stop.

c. Clearly explain why firms will continue to remain in the industry even when economic profits are driven to zero in the long run.

Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q^2.

a. What is the profit-maximizing output for each firm at a market price of $20?

b. How much profit does each firm make at a market price of $20?

c. Explain whether the industry will expand or contract in the long run?

A. A competitive firm

  1. can consider only its location in setting the price.
  2. must base its competitive price on product differentiation.
  3. has the ability to set its own price.
  4. must accept the price determined by the intersection of the market supply and demand curves.
  5. has no supply curve.

B. If a firm is making an economic profit, then

  1. the factors of production are being paid their opportunity costs.
  2. there will be no change in the number of firms if the industry is perfectly competitive.
  3. the factors of production are being paid less than their opportunity costs.
  4. the factors of production are being paid more than their opportunity costs.
  5. the firm will exit the industry

C. Along a downward-sloping monopoly demand curve,

  1. marginal revenue is greater than price.
  2. the elasticity of demand is constant.
  3. marginal revenue decreases when the price decreases.
  4. marginal revenue is equal to zero when the price is equal to zero

D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should

  1. shut down because economic profits are negative.
  2. continue to produce as long as P > AVC.
  3. continue to produce because accounting profits are positive.
  4. set a higher price for its output.
  5. set a lower price for its output

E. For a perfectly competitive firm, the demand curve is

  1. the marginal revenue curve.
  2. perfectly inelastic.
  3. always equal to marginal cost.
  4. the same as the market demand curve

F. A firm in a(n) industry will have the most elastic demand curve

  1. monopolistic
  2. oligopolistic
  3. monopolistically competitive
  4. perfectly competitive

G. If the demand curve of a monopolist is in the inelastic range, then

  1. total revenue will fall if the price increases.
  2. total revenue will be unchanged if the price increases.
  3. total revenue will rise if the price increases.
  4. the total supply will increase by an equal amount if demand increases.
  5. the price will be unchanged if total revenue increases

H. Monopolistic competition and oligopoly are examples of

  1. monopoly.
  2. perfect competition.
  3. theories of consumer behavior.
  4. imperfect competition.
  5. the extreme cases on the market structure continuum

I. Under which market structure do firms face the flattest (most elastic) demand curve?

  1. perfect competition
  2. monopolistic competition
  3. oligopoly
  4. monopoly

J. At the point of long-run equilibrium for a perfectly competitive firm,

  1. economic profits are zero.
  2. TR > TC.
  3. TR < TC.
  4. P = AVC.
  5. normal profits are zero.

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