« previous next »

Author Question: In perfect competition, when market demand increases, explain how the price of the good and the ... (Read 89 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 Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Inverse Relation Between IQ and Disease. Could this explain the Flynn effect? Inverse Relation Between IQ and Disease. Could this explain the Flynn effect?
Gestalt Law of Good Continuation Gestalt Law of Good Continuation
Good alignment for sitting posture. Good alignment for sitting posture.
Humburger is a good source of niacin , vitamin B6 and pantothenic acid Humburger is a good source of niacin , vitamin B6 and pantothenic acid
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
Social scientists have not done well at devising theories to explain lovely romantic moments Social scientists have not done well at devising theories to explain lovely romantic moments
Video: Medullary osmotic gradient: countercurrent multiplier, urea recycling & vasa recta countercurrent exchange

For a complete list of videos, visit our video library