Exam 14: Firms in Competitive Markets

Scenario 14-4 A competitive firm sells its output for $20 per unit. When the firm produces 200 units of output, average variable cost is $16, marginal cost is $18, and average total cost is $23. -Refer to Scenario 14-4. Is the firm maximizing its profit (or minimizing its loss) by producing 200 units of output?

Figure 14-4 In the following figure, graph (a) depicts the linear marginal cost (MC) of a firm in a competitive market, and graph (b) depicts the linear market supply curve for a market with a fixed number of identical firms. ​ -Refer to Figure 14-4. If at a market price of $1.75, 52,500 units of output are supplied to this market, how many identical firms are participating in this market?

The long-run market supply curve in a competitive market will