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A perfectly competitive firm will continue producing in the short run as long as it can cover its?
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∙ 11y ago
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Wiki User
∙ 11y ago
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How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Profits encourage entry into purely competitive industries and losses encourage exit from purely competitive industries because?
When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.
If Pepsi is trying to engage in monopolistic competition why do they keep introducing new flavors of Pepsi and Mountain Dew?
Your question is based on the false predication that Pepsi wants to engage in monopolistic competition. Pepsi can't realistically grab monopolistic market share. By diversifying their flavors, they appeal to a greater number of consumers. As long as they cover the short term costs of producing the new flavors of soda, it would stand to reason that they would continue selling them; from an economic stand point at least. From a marketing stand point, it does nothing to hurt their brand equity or value of the name, so they don't really produce new flavors at anything other than monetary cost. In layman's terms, they keep producing them because it's profitable for them to do so.
If there are no profits in competitive equilibrium why do firms produce how can they stay in business?
why do firm stay in business if profit is=0In economic profit is revenue minus all costs,including implicit costs,like the opportunity cost of the owner's time and money.In the zero profit equilibrium,firms earn enough revenue to cover these costs.by Abdul hanan tareen
Relationship between marginal cost and the supply curve for a purely competitive firm?
Marginal cost curve above the average variable cost curve, is the same as the short run supply curve. In perfect competition, MC=Price. It follows that production will be at that point. Hence the supply curve is the same as that part of the MC curve which is above AVC, where the firm can cover its variable cost....this is better than shutting down.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Profits encourage entry into purely competitive industries and losses encourage exit from purely competitive industries because?
When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.
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