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7 Feb 2019

illustrate a monoply with economic profits, with a loss, break-even.

illustrate a Perfectly competltive firm with economic profits ,with a loss, beak-even

illustrate a Monpoly with socially optimum price and fair return price

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Nelly Stracke
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9 Feb 2019

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Related questions

Suppose at present firms in a perfectly competitive market are earning negative economic profits (losses). Explain the process by which this industry will reach long-run equilibrium. What will happen to the output produced by the average firm and the prices charged? Why? What will happen to profit? Some graphs to illustrate your answers may be very useful.

1. A monopolist produces

a. More than the socially efficient quantity of output but at a higher price than in a competitive market.

b. Less than the socially efficient quantity of output but at a higher price than in a competitive market.

c. The socially efficient quantity of output but at a higher price than in a competitive market.

d. Possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market.

 

2. A perfectly competitive market

a. It May not be in the best interests of society, whereas a monopoly market promotes general economic well-being

b. Promotes general economic well-being, whereas a monopoly market may not be in the best interests of society.

c. And a monopoly market are equally likely to promote general economic well-being.

d. Is less likely to promote general economic well-being than a monopoly market.

 

3. Deadweight loss

a. Measures monopoly inefficiency.

b. Exceeds monopoly profits.

c. Equals monopoly profits.

d. Equals monopoly revenues minus profits.

 

1. If the ATC curve is above the demand curve in a perfectly competitive firm, the firm will have a:
- profit
- loss
- break-even
- price floor
 
2. If the ATC curve is below the demand curve in a perfectly competitive firm, the firm will have a:
- profit
- loss
- break-even
- price ceiling
 
3. Even if in the short run, a perfectly competitive firm has a profit; in the long run, they always break even because:
- low barriers to entry
- profit incentives attract new firms
- perfectly homogenous products
- all of the above
 
4. A perfect competitor would:
- never charge above market price but might charge below market price
- never charge below market price but might charge above market price
- always change the market price
- none of the above
 
5. The crucial aspect of competition among firms that leads to the condition of zero profits in the long run is
- the number of firms in the industry is fixed
- free entry and exit of firms in the industry
- fixed costs equal zero
- all costs are at their least cost level.
 

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