SS21

Try to cut costs of production to decrease loss in short run.

Producer reduces output from 8000 to 6000 boxes of carrots when the price falls to $8.75. Producer is operating at a loss. *What options does producer have?*

1) difference between TR and TC is greatest 2) MR=MC... (can be restated at P=MC)

Profit-maximizing level can be found two ways...

1) marginal revenue 2) marginal cost 3) marginal revenue 4) Average Total Cost

Profits are maximized at the quantity where (1) = (2)... on the graph its where (3) and (4) intersect

1) A+B+C 2) A+B 3) A 4) loss 5) C

Total cost represented by areas (1) Total revenue represented by areas (2) Variable cost is represented by areas (3) (4] pofit or loss) is represented by areas (5)

productive efficiency

What is this point known as?

break even

When MC and ATC intersect, the producer will...

1) $5 2) -127.5 3) at lowest average cost

equilibrium price = (1) If price of individual bean farmer produces 85 boxes of beans per week, she will have economic profit of (2) To break even in the long run, bean farmers must produce the quantity that occcurs (3)

implicit cost

forgone salary and opportunity cost of funds used/aka discount rate

1) continue 2) is as high a return as could be earned elsewhere

(WTF) *Would a firm earning zero economic profit continue to produce, even in the long run?* In the long run competative equilibrium, a firm earning zero economic profit will (1) to produce because such profit... (2)

1) productive efficiency 2) enter and exit 3) break even 4) price 5) minimum average cost

*Does the market system result in productive efficiency?* In the long run, perfect competition results in (1) because firms (2) until they (3) where (4) equals (5)

1) 40 2) 16

*What price will the firm break even?* The firm will earn 0 economic profit in the short run at price of (1) per unit *What price will the firm shut down in the short run?* If it falls below (2) per unit

1) MC 2) AVC

*Where is a firm's shut down point?* When (1) drops below (2)

Economic Profit

A firm's revenues minus all its costs

No, MC>D

Does the firm achieve allocative efficiency at 4?

1) experiencing a loss 2) $4 3) exit 4) zero economic profit

Firms in this market are currently (1) The long run equilibrium price will be (2) In the long run, firms will (3) the market until the marginal firm is earning (4)

1) run (enter?) market supply will increase, decreasing price

PCM] If market price is $15, the firm will (1) the market in the long run. When the firm does (1), what will happen?

1) total profits 2) profits per unit

Remember that firms maximize their (1) not (2)

Accounting Profit

TR-TC

It is consumers' demand that influences the market price and dictates what producers will supply in the market.

Why are consumers so powerful in a market system?

explicit cost

actual funds spent