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Chapter 23: Q. 23.4LO (page 510)

Explain how the equilibrium price is determined in a perfectly competitive market

Short Answer

Expert verified

The market cost price is bigger than orcapable the minimum AVC.

Step by step solution

01

Introduction

When organizations in either a totally tight world with either a given handful of companies work as in short term at least, or the maximum prices are influenced by that of the meeting of both the industry aggregate supply.

02

Given Information

Help in estimating the company's extended supply profile. They separate the reasoning as two segments by partitioning every quick arc.

03

Explanation

So when current expense becomes approximately equal to same lowest (long-run) Dc, then must evaluate a firm's money production amount. help in estimating the startup's dire straits arc These argument will be split into two parts. Because when current expense cost is greater than the able of both the lowest AVC, next evaluate the firm's money product amount.

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Most popular questions from this chapter

Take a look at Figure 23-5, and suppose that the price per unit corresponding to the position of d2 is at $2.50 per unit and that the quantity at point E2 is exactly 5 units per hour. Calculate total revenues and total variable costs at point E2 and explain why it is called the short-run shutdown point.

In several markets for digital devices that can be viewed as perfectly competitive, steady increases in demand for the required minerals ultimately have generated long-run reductions in the market prices of these devices. Describe in words the types of adjustments that must have occurred in these markets to have brought about this outcome, and evaluate whether such digital-device industries are increasing, constant, or decreasing-cost industries.

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Take a look at Figure 23-3. This figure uses the data in the table from Figure 23-2, which indicates that the area of the blue rectangle displaying hourly economic profits is $5 per period. What prevents this firm from continuing to produce the same number of units per hour but raising the price that it charges for each unit in order to enlarge the area of the profit rectangle?
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