Consider the graph of a perfectly competitive firm in the short-run given below.

a. If the firm's demand curve is MR3, does the firm earn an economic profit or loss

b. Which demand curve(s) indicate(s) the firm incurs a loss?

c. Which demand curve(s) indicate the firm would shut down?

d. Identify the firm's short-run supply curve?

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Vaishali YadavLv10

18 Nov 2020

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Related questions

Assume the graph above gives the cost data for a firm in a perfectly competitive industry.

a. Explain the firms demand and short-run supply curve in relation to the curves shown. (What is the firm's demand curve and what is the firm's short-run supply curve?).

b. What short-run production decision should the firm make?

c. Based on this firm

10-When marginal cost is greater than average total cost,
A. Average total cost must be increasing with output
B. Average variable cost must be decreasing with output
C. Average fixed cost must be increasing with output
D. Marginal cost must be increasing with output

11-If a firm's demand curve falls below its AVC curve, then the firm should
A. Shut down now
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Shutdown in the long-run

12- The demand curve facing a perfectly competitive firm is
A. Upward sloping
B. Perfectly inelastic
C. Downward sloping
D. Perfectly elastic

13-If the demand curve falls below the ATC curve but lies above AVC, then the firm should
A. Should shut down
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Operate in the short run and the long run

14-At the output where MC = ATC = P, the perfectly competitive firm
A. Should shutdown
B. Has no economic profit
C. Is not profit maximizing
D. Should raise output