Question

consider a price-taking firm with a minimum effecient scale of production of a quantity greater than...

consider a price-taking firm with a minimum effecient scale of production of a quantity greater than zero. explain how the firm's supply curve would be derived. describe how it would look like if you were able to draw a graph.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A price taking firm doesn't set price , instead ot sell at price determined by industry/ market.

In short run the supply curve of a price taking firm is nothing but Marginal cost curve above minimum average Variable cost/ or shut down price.

The long run supply curve is horizontal straight line at minimum average total cost,which tells in long run price will be equal to Minimum average total cost, irrespective of firm supply and firm will earn normal economic Profit.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The short run supply curve by a price-taking firm is the positively-sloped portion of the short-run...
The short run supply curve by a price-taking firm is the positively-sloped portion of the short-run marginal cost curve because the fixed cost of the firm is going to remain equal even if there is no production, which means that the best decision is to not produce anything if the best positive output gives you a loss greater than the fixed cost, and otherwise to produce y. Thus, the best action to take is to produce nothing if the price...
Suppose that the firm has a minimum quantity of employment, N*; that is, the firm can...
Suppose that the firm has a minimum quantity of employment, N*; that is, the firm can produce no output unless the labour input is greater than or equal to N*. Otherwise, the firm produces output according to the same production function as specified in this chapter. Given these circumstances, determine the effects of an increase in the real wage on the firm’s choice of labour input. As well, construct the firm’s demand curve for labour.
(2) Consider the production function f(L, K) = 2K √ L. The marginal products of labor...
(2) Consider the production function f(L, K) = 2K √ L. The marginal products of labor and capital for this function are given by MPL = K √ L , MPK = 2√ L. Prices of inputs are w = 1 per hour of labor and r = 4 per machine hour. For the following questions suppose that the firm currently uses K = 2 machine hours, and that this can’t be changed in the short–run. (e) What is the...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply graph, draw this equilibrium in the space below. Make this graph large, it will be used for future questions. b. Now suppose the government imposes a binding price ceiling on this market. Identify a value for this price ceiling that would be binding and show it on the graph. Graphically show whether excess demand or excess supply would result. c. With the price ceilings,...
1. Suppose a competitive firm previously set its price at $15 per unit to maximize its...
1. Suppose a competitive firm previously set its price at $15 per unit to maximize its profit, which had been positive. Then the market price falls to $12 and the firm adjusts in order to maximize its profits at the decreased price. After these adjustments what can we conclude about the firm’s quantity of output, average total cost, and marginal revenue in terms of being higher, lower, or the same as before? 2. At current output a profit maximizing competitive...
Consider a firm whose production technology can be represented by a production function of the form...
Consider a firm whose production technology can be represented by a production function of the form q = f(x1, x2) = x α 1 x 1−α 2 . Suppose that this firm is a price taker in both input markets, with the price of input one being w1 per unit and the price of input two being w2 per unit. 1. Does this production technology display increasing returns to scale, constant returns to scale, decreasing returns to scale, or variable...
WTH Inc. exhibits the following production relationship between costs and quantity of Good X: Total Quantity...
WTH Inc. exhibits the following production relationship between costs and quantity of Good X: Total Quantity = 1, Marginal Cost = $200; Total Quantity = 2, Marginal Cost = $ 40; Total Quantity = 3, Marginal Cost = $ 30; Total Quantity = 4, Marginal Cost = $130; Total Quantity = 5, Marginal Cost = $175; Construct a Table of all relevant costs and construct the Graph of WTH's Supply Curve for Good X. Point out (and give explanation of)...
A perfectly competitive constant-cost industry has a large number of potential entrants. Assume that each firm...
A perfectly competitive constant-cost industry has a large number of potential entrants. Assume that each firm minimizes its LRAC at an output of 20 units and at an average cost of $10/unit and has an upward sloping MC curve. Market demand is given by QD = 1500 – 50P. a. Draw a LR graph representing each firm, including the LR equilibrium price, quantity, and profit. b. Draw a graph of the LR demand and supply for the market, including the...
(a) Draw a figure to scale showing the short-run and long-run equilibrium of the firm on...
(a) Draw a figure to scale showing the short-run and long-run equilibrium of the firm on the assumption that the firm, but not the industry, has transitioned to their long-run equilibrium (that is, after changing their plant size but before entry/exit of other firms). Use the following information to piece it together: P = $30; the least-cost input combination of producing q = 2 costs $60; the minimum efficient scale is at q = 8, with LAC = $12.50 at...
(a) Draw a figure to scale showing the short-run and long-run equilibrium of the firm on...
(a) Draw a figure to scale showing the short-run and long-run equilibrium of the firm on the assumption that the firm, but not the industry, has transitioned to their long-run equilibrium (that is, after changing their plant size but before entry/exit of other firms). Use the following information to piece it together: P = $30; the least-cost input combination of producing q = 2 costs $60; the minimum efficient scale is at q = 8, with LAC = $12.50 at...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT