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What is the profit maximizing decision a perfectly competitive firm makes in the short run and explain why this firm can make profits in the short run but not in the long run?
A perfectly competitive firm maximizes profit in the short run by producing the quantity where marginal cost equals marginal revenue. In the short run, firms can make profits due to price fluctuations and temporary market conditions, but in the long run, new firms can easily enter the market, increasing competition and driving down prices to the point where economic profits are reduced to zero.
When a perfectly competitive firm is at its profit maximizing level of output you can say that it is?
is producing where price exceeds marginal costs
When a perfectly competitive firm is at its profit maximising level of output it is?
maximizing the difference between total revenue and total cost
How do you find a monopolist's profit maximising...?
The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.
What are the essential elements of the basic competitive model?
rational, self interested consumers rational, profit maximizing firms competitive markets with price taking behavior
If P equals 8 and MC equals 5 plus 0.2Q the competitive firm's profit-maximizing level of output is?
27.908763334678123
If a perfectly competitive firm's price is above its average total cost the firm?
is earning a profit
How do you find profit maximizing level of output?
The best way to find the profit maximizing level of to calculate it using the profit maximizing formula. To calculate it you need to know margins and how long it takes you to do each task.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Explain the process that drives the economic profit to zero in the long run for a perfectly competitive firm?
In perfectly competitive markets, economic profits are zero in the long run because firms are able to enter and exit the market. If firms in a perfectly competitive market are profitable, there would be an incentive for new firms to enter. Supply would increase, causing an increase in quantity and the price to be driven back down to equilibrium: NO PROFIT! If firms in a perfectly competitive market are suffering a loss, some firms would choose to exit the market. Supply would decrease, causing a decrease in quantity and the price to be driven back up to equilibrium: NO PROFIT!
How do you calculate the profit maximizing output level given a total revenue and total cost function?
how to calculate profit maximizing water level under quadratic cost function
Marginal cost equals marginal revenue?
If the firm operates in a perfectly competitive industry, profit is maximised at the ouput level where mc=mr.
