« previous next »

Author Question: In perfect competition, when market demand increases, explain how the price of the good and the ... (Read 56 times)

bobbysung

  • Hero Member
  • *****
  • Posts: 519
on: Jun 29, 2018
In perfect competition, when market demand increases, explain how the price of the good and the output and profit of each firm changes in the short run.
 
  What will be an ideal response?

Question 2

Refer to Table 2-17. What is Lucy's opportunity cost of making a wagon?
 
  A) 3 wagons B) 3/4 of a wagon C) 1 1/3 tricycles D) 2 tricycles


cegalasso

  • Sr. Member
  • ****
  • Posts: 295
Reply #1 on: Jun 29, 2018
Answer to Question 1

When market demand increases, the market price of the good rises, and the market quantity increases. Because price equals marginal revenue, the rise in the price means marginal revenue rises. As a result, each firm moves up its marginal cost curve and increases the quantity it produces. The firm's economic profit rises (or its economic loss decreases). If the firm had been making a normal profit before the increase in demand, after the increase the firm makes an economic profit.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The U.S. Preventive Services Task Force recommends that all women age 65 years of age or older should be screened with bone densitometry.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

About 60% of newborn infants in the United States are jaundiced; that is, they look yellow. Kernicterus is a form of brain damage caused by excessive jaundice. When babies begin to be affected by excessive jaundice and begin to have brain damage, they become excessively lethargic.

Did you know?

Blood is approximately twice as thick as water because of the cells and other components found in it.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Influence of abiotic factors on competition between T. castaneum and T. confusum. Influence of abiotic factors on competition between T. castaneum and T. confusum.
Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896 Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896
Good body mechanics for sitting on chair while performing massage. A. Sit with back and head in ... Good body mechanics for sitting on chair while performing massage. A. Sit with back and head in ...
Hydroelectric power: 2013 Global Market Hydroelectric power: 2013 Global Market
Nuts are also a good source of dietary fibre Nuts are also a good source of dietary fibre
What's Your BMI? As your BMI increases, you are more likely to be overweight or obese What's Your BMI? As your BMI increases, you are more likely to be overweight or obese
Video: How does asthma work?And How do you treat asthma?

For a complete list of videos, visit our video library