Suppose that a competitive firm's marginal cost of producing output q(MC) is given by MC(q) = 6...
Question:
Suppose that a competitive firm's marginal cost of producing output q(MC) is given by
MC(q) = 6 + 2q.
Assume that the market price(P) of the firm's product is
$15.
What level of output? (q) will the firm produce?
The firm will produce _____ units of output.
(Enter your response rounded to two decimal places.)
Perfect Competition:
Perfect competition is a market structure consisting of large number of buyers and sellers who deals with identical products. The equilibrium price is determined by forces of supply and demand thus, competitive firms are referred to as the price taker.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerIn perfect competition, price is equal to marginal cost. The marginal cost curve is also the supply curve of the perfect competitive firm. Equate the...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Perfect Competition: Definition, Characteristics & Examples
from
Chapter 3 / Lesson 62
275K
Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.
Related to this Question
- In a perfectly competitive market suppose that a competitive firm's marginal cost of producing output q is given by MC(q) = 3 + 2 q. Assume that the market price of the product is $9. A. What level of output will the firm produce? B. What is the firm's pr
- Suppose that a competitive firm's marginal cost of producing output q(MC) is given by: MC(q)=6+2q. Assume that market price (P) of the firm's product is $18. a. What level of output (q) will the firm produce? b. What is the firm's producer surplus? Suppos
- Suppose that a competitive firm's marginal cost of producing output q is given by MC(q) = 3 + 2q. Assume that the market price of the firm s product is $9. \\ a) What level of output will the firm produce to maximize profit? b) What is the firm's produc
- Suppose that the marginal cost of producing output, q, in the short-run for a competitive firm is MC = 10 + 8q. The market price of the firm's product is $25. a. What level of output will the firm pr
- Assume a competitive firm faces a market price of $150, a cost curve of C=1/3q^3+6q+1,500, and a marginal cost of: MC=q^2+6. What is the firms profit maximizing output level?
- Suppose that a perfectly competitive firm's total cost of producing output q is TC(q) = 10 + 10q - q2 + 0.25q3 and market price p = $10. a. Find the short-run supply curve of a firm in this industry. b. How much will the firm produce at p = $10?
- Consider a firm operating in a monopolistically competitive market that faces demand for its product P = 10 -1/2 Q , and with production costs TC = 86 - 14Q + Q^2 How much output will the firm produc
- If a firm in a perfectly competitive market is currently producing the output where the price is equal to marginal cost and average total cost, what could we assume about the firm? A) The firm is suff
- Consider a Cournot competition game. The market demand function is: p = 4 - q_1 - q_2, where p is price and q is firm i's output level. Suppose that the firm's marginal cost of production is: c_1 = 1
- A firm that operates in a competitive market has a total cost of production given by TC(Q) = 3,000 + 5Q + 18Q^2 and marginal cost given by MC(Q) = 5 + 36Q. The market price for the product it sells is P = $239. Then the profit maximizing quantity is: (a)
- Suppose in the short run a perfectly competitive firm has a fixed cost , F = $147. The firm s variable cost of production is given by TVC = 3q +3q^2, where q is the quantity of output that the firm produces. The marginal cost of the firm is given by MC =
- Assume that for a perfectly competitive firm marginal revenue equals rising marginal cost at 100 units of output. At this output level, the firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $10 per unit, t
- Suppose that a perfectly competitive firm faces a market price of $12 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1,800 units. If the firm produces 1,800
- At the level of output where marginal revenue equals marginal cost, assume that the price of a competitive firm's product is between the firm's average total cost curve and its average variable cost curve. In this case, the firm would: a) decrease output
- Assume a perfectly competitive firm is in long-run equilibrium and there is a decrease in market demand for the firm's output. Which of the following will occur? A. The market price will be above its original level. B. Existing firms will reduce output i
- Consider a two-firm oligopoly facing a market inverse demand curve of P = 100 - 2(q1 + q2), where q1 is the output of Firm 1 and q2 is the output of Firm 2. Firm 1's marginal cost is constant at $12,
- If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, graph the situation and explain why if MC>MR, it does not necessarily mean the firm will
- Suppose that, at the current market price of $10, consumers demand 200 units of output. A perfectly competitive firm is currently producing 20 units of output, and at that point, marginal revenue is equal to marginal cost. Given this, the firm (will or wi
- Consider a firm that produces output in a perfectly competitive market. The firm's total cost curve takes the form of TC=100+10Q+Q^2 and marginal cost takes the form MC=10+2Q. The point of the minimum average total cost is Q=10. a. If the market price is
- For a firm selling its product in a perfectly competitive market, the demand curve for a factor of production is downward sloping because a. of the diminishing marginal product of the factor b. to s
- Assume a monopolistically competitive firm is producing at an output level at which marginal revenue is $15 and the marginal cost is $18. The profit-maximizing firm should: a. Raise output, b. Lower output, c. Keep output constant, d. The firm should take
- Suppose a perfectly competitive firm is producing a level of output for which price equals average total cost, and the average total cost is less than marginal cost. In order to maximize its profits, the firm should: a) reduce its output. b) expand its ou
- 28) Consider a perfectly competitive firm that is producing a level of output such that price equals average total cost and average total cost is less than marginal cost. In order to maximize its profits, the firm should A) reduce output. B) expand output
- Suppose a firm's production for output y is given by f ( x_1, x_2 ) = x_1^alpha x_2 ^beta. The firm is in purely competitive market. It can sell output at price p and must pay w-1 and w_2 for inputs
- Consider a situation in which there is perfect competition in both the input and output markets. The firm will hire that input level which equates: a. marginal revenue product with marginal factor cost b. marginal physical product with marginal factor cos
- Suppose that a competitive firm has a total cost function of C(q) = 410 + 15q + 2q^2 and a marginal cost function of MC(q) = 15 + 4q. If the market price is P = $131 per unit, find the level of output produced by the firm. Find the level of profit and the
- A competitive firm's cost function is: C = 0.38Q3 - 22Q2 + 488Q + 363 The market price of your output is $103. Calculate the profit-maximizing level of output. (Please round answer to the 2nd decima
- A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. F
- Suppose that a firm in a competitive market faces the following prices and costs: |Price |Quantity |Total Cost |$6|0|$4 |$6|1|$6 |$6|2|$9 |$6|3|$13 |$6|4|$18 |$6|5|$24 |$6|6|$31 The marginal revenue from producing the 3rd unit equals: i) $6 ii) the pri
- Suppose a perfectly competitive firm's total cost of producing output q is TC(q)=10+10q-q^2+0.25q^3 and market price p*=10. Find the short-run supply curve of a firm in this industry.
- Assume a perfectly competitive firm is producing a level of output at which MR is greater than MC. What should the firm do to maximize its profits? A) The firm should increase output. B) The firm should increase the price. C) The firm should do nothing -
- Suppose market demand is P = 150 - Q, the cost of production of each firm is C(qi) = 30qi. Assume there are two firms,1 and 2, engaging in a Cournot competition. Consider a price-fixing (or collusion) agreement between them to achieve monopoly price (henc
- Suppose a perfectly competitive firm is in long-run equilibrium and there is a decrease in demand. Suppose also that the firm operates in an industry in which the prices of productive inputs vary with the level of output, increasing when output increases
- For a firm in a perfectly competitive industry: a) marginal revenue and product price are equal at every level of output. b) the price elasticity of demand is zero. c) the demand curve is unitary elastic throughout. d) more output can be sold only if the
- Assume the industry demand for a product is P=1000-20Q. Assume that the marginal cost of product is $10 per unit. a) What price and output will occur under pure competition? What price and output will
- A competitive firm's cost function is: C=0.48Q3-27Q2+418Q+16393. The market price of your outputs $152. Calculate the profit-maximization level of output.
- Assume a perfectly competitive firm is in long-run equilibrium, and there is a decrease in market demand for the firm's output. Which of the following will occur? a. Existing firms will maintain the original output level, but they will shift their cost f
- Assume that the Law of Diminishing Marginal Product applies at the current output level of a competitive firm. The price is $20 and, at the current output level, marginal cost is $16 and average total cost is $20. To maximize profits the firm should: a.
- Assume that the law of diminishing marginal product applies at the current output level of a competitive firm. The price is $20. At the current output level, marginal cost is $16 and the average total cost is $20. To maximize profits, the firm should: a.
- Assume that the Law of Diminishing Marginal Product applies at the current output level of a competitive firm. The price is $20 and, at the current output level, marginal cost is $22 and average total cost is $21. To maximize profits the firm should: a. p
- Suppose the cost function for your firm is: C = 10 +2Q + 5Q^2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $35. What level of output should the firm produce to maximize profits or mi
- Assume a competitive firm faces a market price of $125, a cost curve of C = 0.25q^2 + 25q +1600 and a marginal cost curve of MC = 0.05q + 25. The firm's profit maximizing output level is 200 units, the profit per unit is $42 and total profit is $8400. How
- The marginal cost of a firm under perfect competition is given by the equation MC = 2QF - 20. The market price is $43 per unit. Determine the firm's profit-maximizing level of output.
- 1.) Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $15 per unit and is incurring average variable cost
- Two firms, 1 and 2, compete in a market with demand P = 1 - Q, where P is the market price and Q is the market output. The marginal costs of firm 1 is 1/2 and firm 2 is c less than 3/4. a) Compute the
- A competitive firm's cost function is: C = 0.4Q3 - 31Q2 + 495Q + 18,318 The market price of your output is $123. Calculate the profit-maximizing level of output. (Please round answer to the 2nd de
- Consider a firm in a perfectly competitive market with total costs given by TC = Q3 - 15Q2 + 100Q + 30 a.) What is this firm's marginal cost function? b) Over what range of output are the firm's mar
- Assume that a firm acts as a price taker. Regardless of the demand, it sells each unit of its product for $5. (a) Assume that the firm's marginal cost is given by MC = 0.2q + 3. What is the level of
- Suppose in the short run a perfectly competitive firm has variable cost = 4q^2, and MC = 8q where q is the quantity of output produced. Also, the firm has fixed cost F = 256. (a) If the market price
- If a competitive firm currently producing a level of output at which marginal cost exceeds marginal revenue, then Monopoly firms have what?
- Suppose the demand for a commodity is given as Q-300-20P, the marginal cost of producing this commodity for this industry is MC=5+0.05Q (1) If it is a perfectly competitive industry, what will be the
- Consider a perfectly competitive firm that is currently producing a quantity of one hundred units. At this level of output, suppose its marginal cost is $60 and its average total cost is $60. Given a
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + \frac{1}{2}q^2 Marginal Cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is: Q_D = 120 - P where P is t
- Suppose that a firm in a competitive market faces the following prices and costs: Price Quantity Total Cost $6 0 $4 $6 1 $6 $6 2 $9 $6 3 $13 $6 4 $18 $6 5 $24 $6 6 $31 Refer to Table 14-11.The marginal revenue from producing the 5th unit equals (i) $6. (i
- Suppose a perfectly competitive firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $10 per unit and is incurring average variable costs of $5 per unit and average total co
- A perfectly competitive firm is producing at the profit-maximizing output level and it finds that its AVC is $4.35, its ATC is $4.50, and its price is $4.45 at that output level. Which of the following is true? A. The firm should shut down because P AVC
- Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $12 per unit and is incurring average variable costs of
- Suppose market demand is P = 150 - Q, cost of production of each firm is C(q_i)= 30q_i. Assume there are two firms, 1 and 2, engaging in a Cournot competition. Consider a price-fixing (or collusion agreement between them to achieve monopoly price (hence p
- Does a perfectly competitive firm produce a level of output at which P = MC? Does a single-price monopolist produce a level of output at which P is greater than MC? Is a perfectly price-discriminating
- Output is homogenous and the demand curve is P = 448 - Q. There are two firms with identical costs given by C = q2 i where qi is the production of firm i. The marginal cost of firm i is MCi(qi) = 2q
- Can there be a positive level of output that a profit maximising firm produces in a competitive market at which market price is equal to marginal cost?
- Suppose that a competitive firm has a total cost function of C(q) = 410 + 15q + 2(q^2) and a marginal cost function of MC(q) = 15 - 4q. If the market price is P = $131 per unit, find: a) The level
- A perfectly competitive firm sells its product for $170/unit and has a total cost of production given by: C(Q) = 50Q + 2.5Q^2 + 400. A) What are this firm's fixed costs? Explain. B) Determine this firm's profit maximizing level of output. C) Determine thi
- Consider a competitive firm. The production function is Q = L^.5, the marginal product of labor is MP_L = 1/L^.5, the price level taken as given is P = 20, and the wage rate taken as given is w = 5. A
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + 1/2q^2 Marginal Cost: MC = q, where q is an individual firm's quantity produced. The market demand curve for this product is: QD = 140 - 2P, where P is the p
- Suppose a firm has monopsony power and faces the supply curve LS = 2W. Assume the product market is competitive and the product price is p = $10. Also suppose MPL = 10 - L/10. a. What is W(L) equal to? b. What is this firm's MCL equal to? c. What would ha
- Suppose a perfectly competitive firm has a cost function described by TC = 200 Q + Q^2 + 225 Each firm's marginal revenue is $240. a. Find the profit maximizing level of output. b. Is this a short-run or long-run situation? c. Assuming that this firm's to
- Suppose a perfectly competitive firm in the short-run is currently producing an output level of 50,000 units, charging a price per unit of $4. The firm incurs variable costs of $280,000 in producing this level of output. It also has fixed costs of $60,000
- In the short run, a monopolistically competitive firm: a. produces the amount of output for which the price equals its marginal cost b. faces a horizontal demand curve for each output c. produces an amount of output for which its marginal cost is greater
- If a profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost, it should: A. increase its output. B. reduce its output bu
- For a competitive firm, the level of output that maximizes profits is where marginal revenue {Blank} marginal cost, and for a monopolist, it is where marginal revenue {Blank} marginal cost. A. is equal to; is greater than B. is greater than; is equal to C
- A monopolistically competitive firm is producing at a short-run output level where the average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. In the short run, the firm should A) decrease the level of output.
- If a perfectly competitive firm is producing at an output at which marginal cost exceeds marginal revenue: A. price will be at the profit-maximizing level. B. the firm should reduce production. C. sales will be at the profit-maximizing level. D. the fi
- A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4x^{1/2}. The price of output is $28 and the factor price is $7. The amount of the factor that the firm demands is A. 8. B. 16. C. 64. D. 60. E. None of the above.
- A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4x^{1/2}. The price of output is $28 and the factor price is $7. What is the amount of the factor that the firm demands?
- A perfectly competitive firm's profit per unit of output can be determined by the amount by which the demand curve facing the firm lies above the marginal-cost curve at the profit-maximizing output level. A.True B.False
- Suppose a perfectly competitive firm has the marginal cost function of MC = 3Q. The market price is given by P = $45. How many units of output will the firm produce?
- For a perfectly competitive firm, at profit maximization a) production must occur where average cost is minimized. b) market price exceeds marginal cost. c) marginal revenue equals marginal cost.
- Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and its average variable cost. To maximize profit, the firm should a. lower the price b. raise the price c. increase output d. reduc
- Consider a perfectly competitive firm that is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $10 per unit and is incurring average variable costs of $5 per unit and average to
- Assume a firm's inverse demand for its product is P = 150 - Q and total cost is TC = 500 + 50Q for a monopolistically competitive firm: a) Find marginal revenue (MR) and marginal cost (MC). b) Calcu
- 1. For a firm operating in a perfectly competitive market, profit maximization is attained at that level of output where: A. the price of the product is equal to the marginal cost of producing the las
- Assume that a competitive firm has the total cost function: TC=1q3-40q2+810q+1500 Suppose the price of the firm's output is $700 per unit. What is the total profit at the optimal output level?
- Can there be a positive level of output that a profit-maximizing firm can produce in a competitive market, at which, the market price is not equal to marginal cost? What is an explanation?
- In ____ market structure, a firm's output depends ____. a. an oligopoly; only on its own marginal revenue and marginal cost curves b. a monopolistically competitive; in part on its competitors' price and quantity decisions c. a monopolistically competiti
- In the long-run equilibrium in a perfectly competitive market, each firm produces an output at which: a) Price equals marginal cost of production b) Average cost equals marginal revenue c) Marginal co
- The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profit, this firm ____. a. should increase its output b. should reduce its output c. should keep its output the same d. needs more
- A firm has a cost function of TC(q) = 80 + 4q + 2q^2 and a marginal cost function of MC(q) = 4 + 4q. At the given market price of $16, the firm is producing 3 units of output. Is the firm maximizing p
- Given a perfectly competitive market structure, suppose a firm's total revenue equals $210 and its output is 70 units when the firm's marginal-cost curve intersects its marginal-revenue curve. Since the firm is a profit-maximizing firm, what is marginal r
- If marginal cost is equal to marginal revenue: a. the firm should hold output constant. b. the firm should expand output. c. there is no way to determine if the firm should expand output, contract output, or hold output constant. d. the firm should contra
- Suppose that we have two duopolists who face a linear demand curve: p(Q) = a ? b (Q), where Q is the sum of the two producers' outputs. The cost of production for each firm is given by c(q) = cq. A
- If a profit-maximizing firm in a competitive market discovers that at its current level of production, price is less than marginal cost, it should: A. exit the industry B. increase its output C. keep output the same D. reduce its output
- In a perfectly competitive market, the market price is $20. At the current level of output, a firm has a marginal cost of $15. What should the firm do? A) nothing, it is currently maximizing profit
- Suppose there are two firms in a market. Each has marginal cost = 0. The inverse demand curve is given by P=600-10Q, where Q=q1+q2. Firm 1, the "leader" chooses its output level first. After it makes
- Suppose that at a given level of output, a perfectly competitive firm charges a price of $12 and has average total costs of $10. If its economic profit is $20,000, then it must be producing: A.30,000
- Consider an oligopolistic market with 2 firms and a demand curve given by P A/Q, for P the market price and Q the market demand. Each firm has a constant marginal cost of production equal to $c per un
Explore our homework questions and answers library
Browse
by subject