For a firm in a perfectly competitive industry Show Question 26 options: Its MC curve is its supply curve its ATC is its supply curve its long-run ATC curve is its long-run supply curve its long-run AVC curve is its long-run supply curve Answer & Explanation  The correct option is A) Its MC curve is its supply curve Step-by-step explanation In a perfectly competitive market, the short run supply curve is the marginal cost (MC) curve at and above the shutdown point. Theportions of the marginal cost curve below theshutdown point are no part of the supply curve because the firm is not producing in that range. In a perfectly competitive industry, a firm's total revenue curve is a straight, upward-sloping line whose slope is the market price.The firm's supply curve in the short run is its marginal cost curve for prices greater than the minimum average variable cost. Recommended textbook solutionsPrinciples of Economics8th EditionN. Gregory Mankiw 1,335 solutions Principles of Economics7th EditionN. Gregory Mankiw 1,394 solutions Statistical Techniques in Business and Economics15th EditionDouglas A. Lind, Samuel A. Wathen, William G. Marchal 1,236 solutions
Financial Accounting4th EditionDon Herrmann, J. David Spiceland, Wayne Thomas 1,097 solutions Where do perfectly competitive firms produce in the short run?In the short run, the perfectly competitive firm will seek the quantity of output where profits are highest or—if profits are not possible—where losses are lowest. In this example, the short run refers to a situation in which firms are producing with one fixed input and incur fixed costs of production.
What happen when P MR MC in a perfectly competitive market?This means that the additional revenue from selling one more is greater than the cost of making one more. a profit maximizing firm produces where P=MC Page 21 In a perfectly competitive market, the firm's demand curve is the firm's marginal revenue curve. The firm maximizes profits by producing where MR = MC.
What is ATC in perfect competition?Productively Efficient: Productive efficiency occurs when the firm is producing at the minimum of the average total cost (ATC) curve (where it intersects the MC). In the short run, perfectly competitive firms are not productively efficient, but in the long run they are.
When P ATC firms earn normal profits and production should continue?A Perfectly Competitive Firm's Output
P = ATC — the firm earns a normal profit and zero economic profit. (The firm breaks even.) P < ATC — the firm incurs an economic loss. A firm incurring economic losses must decide whether to shut down temporarily: ♦ If P > AVC, the firm continues to produce.
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If a perfectly competitive firm in the short run is producing where P = ATC MC this firm is
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