The perfectly competitive firm will produce in the A. long run if the price is below average...
Question:
The perfectly competitive firm will produce in the
A. long run if the price is below average total cost but above average variable cost.
B. short run if the price is below average total cost but above average variable cost.
C. long run if the price is below average variable cost.
D. short run if the price is below average variable cost.
Perfect Competition:
Perfect competition is a type of market structure that consists of many buyers and sellers. Thus, no single buyer or seller has the power to influence market price.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe answer is B).
In the short run, a firm cannot recover the fixed costs, and thus should not incorporate the fixed cost in the production decision....
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
Average Variable Cost (AVC): Definition, Function & Equation
from
Chapter 13 / Lesson 8
235K
Learn the definition and applications of average variable cost, the average variable cost formula, and how to calculate the average variable cost using its formula.
Related to this Question
- In the short run, a perfectly competitive firm will shut down if the price is less than: a. average total cost b. average variable cost c. marginal cost d. total cost e. average fixed cost
- A perfectly competitive firm will continue producing in the short run as long as it can cover its: A. total cost B. average total cost C. average variable cost D. average fixed cost
- In the short run, a firm will produce zero output if __________. A) price is greater than short run average total cost. B) price is between short run average total cost and short run average variable cost. C) price is less than short run average variable
- A perfectly competitive firm will shut down immediately when the market price falls below: a) average variable cost. b) average total cost. c) average fixed cost. d) marginal cost. e) None of the above.
- A perfectly competitive firm should not shut down immediately as long as the price is: a. lower than the average variable cost. b. higher than the average total cost. c. lower than the zero-profit point. d. higher than the average variable cost.
- Your firm has a price of $4.00, An average total cost of $6.00, and an average variable cost of $3.00. In the short run you should A. shut down or B. Operate because A. Average total cost B. Variable cost or C.Price exceeds A.Average variable cost or B. P
- If a competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will: A. keep producing in the short run and exit in the long run B.
- In a perfectly competitive industry, the market price is $30. A firm is currently producing 15,000 units of output, its short-run average total cost is $28, its marginal cost is $20, and its average variable cost is $20. Given these facts, explain whether
- A perfectly competitive firm has the following short-run total cost. Calculate the firm's marginal cost and, for all output levels except zero, the firm's average variable cost and average total cost.
- A competitive firm will exit an industry in the long run if the market price over the long run falls below the firm's a. marginal revenue. b. marginal cost. c. average cost. d. average variable cost.
- A perfectly competitive firm should shut down in the short run if price falls below the minimum of: A) average variable costs. B) marginal revenue. C) average total cost. D) fixed costs. E) marginal cost.
- A perfectly competitive firm will not produce any output in the short run and will shut down if price is: a. greater than marginal cost. b. less than marginal cost. c. less than average variable cost. d. greater than average variable cost and less tha
- If a profit-maximizing, perfectly competitive firm is producing a quantity at which price is higher than average total cost but lower than average variable cost, then: a. keep producing both in the short run and in the long run. b. keep producing in the s
- A perfectly competitive firm should shut down in the short run if: A. the price is lower than the average total cost B. the price is lower than the average variable cost C. the price is lower than the average fixed cost D. the price is lower than the marg
- If the price is less than the average total cost for a perfectly competitive firm in the short-run, then the firm _____.
- In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28,its marginal cost is $20, and its average variable cost is $20. Given these facts, explain whether the follow
- If a firm shuts down in the short-run, its cost will equal its: a. average total cost b. total cost c. variable cost d. fixed cost e. average fixed cost
- A competitive firm currently produces and sells 7,500 units of output at a price of $2.50 per unit. The firm's average fixed cost is $0.75 and its average total cost is $2.80. In the short run, should the firm continue to operate?
- Even if it is making economic losses, a perfectly competitive firm should keep operating in the short run so long as the price is: a. higher than the average variable cost b. lower than the average total cost c. lower than the average variable cost
- A profit-maximizing firm operating in a perfectly competitive market will make a loss but continue to produce in the short run when: a. price is below average total cost but above average variable cost. b. price is below average variable cost but above av
- In a perfectly competitive industry the market price is $12. A firm is currently producing 50 units of output; average total cost is $10, and average variable cost is $7. In order to maximize profit, the firm should: a. produce more because the firm is ea
- In the short run, a perfectly competitive firm is producing at a price below average total cost. Therefore, what is its economic profit?
- If a firm is a price taker, STC = 15q^2 + 8q + 45 SMC = 30q + 8 a) Find the firm's fixed cost and variable cost, average total cost, and average variable cost in the short run. b) Find the firm's sho
- In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable co
- If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will a. keep producing in the short run but exit the market in the long run. b. shut down in the short run
- In perfect competition, a firm maximizing its profits will set its output at that level where a. Average variable cost = price b. Marginal cost = price c. Total cost = price d. Average fixed cost = price
- In yet another competitive industry, the market-determined price is $10. For a firm currently producing 250 units of output, short-run marginal cost is $7, average total cost is $39, and the average v
- The perfectly competitive firm will suspend operations (shut down) when a. price exceeds marginal cost. b. price is equal to average total cost. c. price exceeds average variable cost. d. price is
- In the short run, when the price is below average total cost, a firm in a competitive market will: a. Shut down and incur the loss of both variable and fixed costs. b. Continue to operate as long as average revenue exceeds marginal cost. c. Continue to op
- In a different competitive market, the market-determined price is $80. For a firm currently producing 1,000 units of output, short-run marginal cost is $100, average total cost is $100, and average va
- The price taker firm should discontinue production immediately if: a. The market price is less than the firm's average variable costs, b. The market price is less than the firm's average total costs, but greater than its average variable cost, c. The mark
- The short-run supply curve of a perfectly competitive firm: a. Intersects the minimum point of both its short-run average variable cost and its short-run average total cost curves, b. Intersects the minimum point of its short-run average variable cost cur
- To sustain in a perfectly competitive market, a firm should: a. produce where the price is greater than the marginal cost. b. charge a price equal to its average variable cost. c. operate close to
- A competitive firm will choose to shut down in the short-run whenever: Price is less than minimum average variable costs or price is less than average variable costs?
- The short-run supply curve for a perfectly competitive firm is given by: a. the entire marginal cost curve. b. the marginal cost curve at and above average variable cost. c. the marginal cost curve at and above average total cost. d. the average variable
- If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, what will it do in the short run and the long run? Will it shut down, exit the market, or keep producing?
- The equilibrium price is the: A. long-run average total cost of the last entrant into the market. B. average marginal cost of the firms. C. long-run average total cost of the first entrant into the market. D. minimum of the average variable cost of t
- A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. Its average total cost is A. more than $64. B. between $58 and $62. C. between $62 and $64. D. less than $58.
- A perfectly competitive firm is producing 100 units (profit-maximizing). If the price is $12, the average total cost is $11, and the average variable cost is $10, this firm's profits are: a. $0 b. $1 c. $10 d. $100
- In long-run equilibrium, the perfectly competitive firm sets its price equal to which of following? a. Short-run average total cost b. Short-run marginal cost c. Long-run average cost d. All of the above answers are correct
- A competitive firm will produce a lowest average cost in the long run: a) regardless of whether it produces a differentiated or homogenous product because both have U-shaped average cost curves b) onl
- A firm shuts down if the price is? A) below average total cost. B) above minimum average fixed cost. C) below minimum average variable cost. D) above minimum average variable cost. E) less than marginal cost.
- A firm shuts down if price is: A) below average total cost. B) above minimum average fixed cost. C) below minimum average variable cost. D) above minimum average variable cost. E) less than marginal cost.
- For a perfectly competitive firm in the short run, what is the lowest price the firm will continue to operate at? a. price equal to marginal cost b. price equal to marginal revenue c. price equal to average variable cost d. price equal to average total co
- A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost A. is between $40 and $60. B. is more than $60. C. is less than $40. D. The cost cannot be determined without more information.
- Over the short run, total cost is equal to: a) average total cost plus marginal cost. b) total fixed cost plus total variable cost. c) total variable cost multiplied by average total cost. d) average fixed cost multiplied by average variable cost.
- In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28,its marginal cost is $20, and its average variable cost is $20. Determine whether the following statements ar
- In a perfectly competitive market, the price in the long run: a. will always be more than the minimum average total cost of the industry. b. will always be less than the minimum average total cost of the industry. c. will always equal the minimum average
- A competitive firm's short-run supply curve is its cost curve above its cost curve. a. average total cost, marginal b. average variable, marginal c. marginal, average total d. marginal, average variable
- A perfectly competitive firm has the following short-run total cost function: SR-TC = 18 + 5q + 2q^2. a. Find the firm's short-run marginal cost (SR-MC), short-run average total cost (SR-ATC), and sh
- A profit-maximizing firm in the monopolistic competition should shut down in the short run: A. under no circumstances. B. if the price is always less than the average variable cost. C. if the price is always less than the average total cost. D. if the pr
- In the long run, a firm will exit a competitive industry if: a. total revenue exceeds the total cost. b. the price exceeds the average total cost. c. the average total cost exceeds the price. d. Both a and b are correct.
- A firm's average total cost is $80, its average variable cost is $75, and its output is 50 units. Its total fixed cost is A. less than $100. B. more than $300. C. between $200 and $300. D. between $100 and $200.
- 2. A competitive firm has the following short-run cost function: c(y) = y3 - 8y2 + 30y + 5. What is the firm's marginal cost function? What is the firm's average cost function? Average variable cost i
- When price is below average variable cost, a firm in a competitive market will a. continue to operate as long as average revenue exceeds average fixed cost. b. shut down and incur both variable and
- A perfectly competitive firm's supply curve follows the upward sloping segment of its marginal cost curve above the a. average total cost (ATC) curve. b. average variable cost (AVC) curve. c. average fixed cost (AFC) curve. d. average price (APC) curv
- A firm operates in the short run with total fixed costs of $8,000.00 and total variable costs (TVC) related to the quantity of output as shown below. A. Calculate the average variable cost when output is 4 units. B. Calculate the average total cost when o
- The perfectly competitive firm should shut down where: A. marginal revenue is less than marginal cost B. price is less than average total cost C. total revenue is less than total cost D. price is less than average variable cost
- If a perfectly competitive industry is in long run equilibrium, the price of the product equals minimum: Select one: a. marginal cost. b. average total cost. c. average variable cost. d. fixed cost.
- It would not pay a firm to produce anything in the short run if the price were: a. above average total costs. b. equal to marginal cost and above the average variable cost. c. equal to total revenue divided by output. d. below average variable cost. e. be
- In a perfectly competitive market, in the short run a firm should shut down if a. price is less than average fixed cost when marginal revenue equals marginal cost. b. price is less than average vari
- A firm shuts down if price is: A) above minimum average variable cost. B) below minimum average variable cost. C) above minimum average fixed cost. D) less than marginal cost below average total cost.
- A firm has a fixed production cost of $10,000 and a constant marginal cost of $1000 per unit. A. Calculate the firm's average variable cost, average fixed cost and average total cost curves. B. If the firm wishes to minimize the average total cost of prod
- After all long-run adjustments in a perfectly competitive industry, product price will be exactly equal to, and production will occur at, each firm's: a. maximum average total cost b. minimum average total cost c. marginal revenue d. minimum marginal cost
- A competitive firm's short-run supply curve is its cost curve above its cost curve. a. average total, marginal b. average variable, marginal c. marginal, average total d. marginal, average variable
- In long-run equilibrium, the perfectly competitive firm sets its price equal to which of the following? a. Short-run average total cost b. Short-run marginal cost c. Long-run average cost d. All of the above answers are correct
- A competitive firm's short-run supply curve is its ...................... cost curve above its ...................... cost curve. a. average variable, marginal b. average total, marginal c. marginal, average total d. marginal, average variable
- The perfectly competitive firm will close operations (exit) when: A) Price is below Marginal Cost B) Price is equal to Average Total Cost C) Price is below Average Total Cost D) Price is equal to Marg
- A perfectly competitive firm hires capital and labor at competitive price r and w. In the long run, the firm operates at a minimum average cost. Total cost is the sum of the resource expenditures i.e.
- Does a competitive firm's price equal the minimum of its average total cost in the short run, in the long run, or both? Explain.
- In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; average total cost is $10, marginal cost is $15, and average variable cost is $7. In order to maximize profit, the firm should: a. produce more
- A firm shuts down if price: a. is above minimum average variable cost. b. is above minimum average fixed cost. c. is below average total cost. d. is below minimum average variable cost. e. is less than marginal cost.
- For the perfectly competitive firm, the profit-maximizing decision to shut down is made when the price: A. falls below minimum average total cost. B. is greater than minimum average variable cost, but lower than minimum average total cost. C. falls below
- A perfectly competitive firm experiences the following at its current level of output: industry price is $10, average total cost is $8, average fixed cost is $4, and marginal cost is $11. Under these conditions, in the short run, the firm should: a. expan
- In the short run in perfect competition, a firm will shut down when: a. marginal revenue equals marginal cost. b. price is below average total cost. c. price is below average variable cost. d. economic profit is zero.
- A perfectly competitive firm is in the short run and has variable cost = 6q^2 and MC = 12q, where q is the quantity of output produced. The firm has fixed cost F = 1012. a. How do you find the break-even price for this market? b. Suppose the market demand
- When a perfectly competitive firm is in long-run equilibrium, the firm is producing at _ cost. a. Minimum long-run average total b. Minimum marginal c. Maximum average total d. Maximum average variabl
- A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000, a. average fixed cost is 50 cents, b. average variable cost is $2, c. average total cost is $2.50, d. average total cost is 50 cents.
- In the standard model of pure competition, a profit-maximizing firm will shut down in the short run if the price is below: a. average variable cost b. average cost c. average fixed cost d. marginal cost
- Average fixed cost production function average product of labor average total cost short run average variable cost short-run marginal cost fixed input total cost total fixed cost law of dimi
- A purely competitive firm's short-run supply curve is: A. the upward sloping portion of its average cost curve. B. the upward sloping portion of its average variable cost curve. C. its marginal cost curve above average variable cost. D. its average variab
- The owners definitely will shut down a perfectly competitive firm if the price of its good falls below its minimum: A) average marginal cost B) wage rate C) average variable cost D) average total cost
- If a competitive firm in the short run has its average total costs below the price: a) the firm has an economic loss. b) the firm should shut down. c) the firm should exit the industry. d) the firm has an economic profit.
- A competitive firm short-run supply curve intersects its average total cost curve at the point (Q=450, P=$22). What is the value of the marginal cost at Q=450?
- A perfectly competitive firm is is currently producing at a point at which price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, this firm should do what?
- In the short-run, under what conditions should the firm shut down (a) average total cost at the minimum point (b) price greater than average variable costs (c) price less than average variable costs (d) marginal revenue greater than marginal costs (e) mar
- In the short-run, under what conditions should the firm shut down? a) average total cost at the minimum point. b) price greater than average variable costs. c) price less than average variable costs. d) marginal revenue greater than marginal costs. e) ma
- 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
- A competitive firm's short-run supply curve is its ________ cost curve above its ________ cost curve. 1) average total, marginal 2) average variable, marginal 3) marginal, average total 4) margina
- When a competitive firm makes a decision to shut down, it is most likely that: a. marginal cost is above average variable cost. b. marginal cost is above average total cost. c. price is below the minimum of average variable cost. d. fixed costs exceed var
- The market price for a good is $9 and will not change. Currently, a perfectly competitive firm is producing 1,200 units of output. At this level of output, the firm's variable costs are $7,000, its fixed costs are $5,000, its average total costs are at th
- A perfectly competitive firm is producing at an output level where marginal cost is $8 and the average total cost is $7. The current price of the good is $7.50. To maximize its profit, what should this firm do? Assume that the firm is currently operating
- Suppose the manager of a firm operating in a competitive market in the short-run has estimated the firm's average variable cost (AVC) function to be AVC = 4.0 - 0.0024q + 0.000006q^2. Total fixed cost (TFC) is $600. (a) What is the corresponding average t
- Assuming no fixed costs are avoidable in the short run, a perfectly competitive firm's short-run supply curve is a. the portion of its average variable cost curve that lies below its average total cos
- Firms shut down in the short-run when the price cannot cover: a. Fixed costs. b. Average variable costs. c. Average total cost. d. Total cost.
- Consider a perfectly competitive firm that produces and sells 20 units of output per-period (e.g. weekly) at the market price of $4. If average fixed cost is $1, average variable cost is $2, and marginal cost is $4, then the firm: I) is maximizing total p
- Consider a perfectly competitive firm that produces and sells 40 units of output per-period (e.g., weekly) at the market price of $6. If average fixed cost is $2, average variable cost is $1, and marginal cost is $6, then the firm: i. is maximizing total
- In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and a. total cost. b. average variable cost. c. total fixed cost. d. t
Explore our homework questions and answers library
Browse
by subject