consider a firm whose average cost curve as well as three possible firm demand curves (a, b, and c) are illustrated in the accompanying graph: price ($ per unit) quantity 0 200 400 600 800 1,000 1,200 1,400 1,600 0 1 2 3 4 5 6 7 8 average cost demand a demand b demand c a. determine which demand curve entails negative economic profits. move the point labeled demand a to identify this curve. if the firm faces demand a, in the long run, you would expect the number of firms in the market to . b. determine which demand curve entails positive economic profits. move the point labeled demand b to identify this curve. if the firm faces demand b, in the long run, you would expect the number of firms in the market to . c. determine which demand curve illustrates zero economic profits. move the point labeled demand c to identify this curve. if the firm faces demand c, in the long run, you would expect the number of firms in the market to

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djjohnson2851 djjohnson2851

14-12-2022
Business

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consider a firm whose average cost curve as well as three possible firm demand curves (a, b, and c) are illustrated in the accompanying graph: price ($ per unit) quantity 0 200 400 600 800 1,000 1,200 1,400 1,600 0 1 2 3 4 5 6 7 8 average cost demand a demand b demand c a. determine which demand curve entails negative economic profits. move the point labeled demand a to identify this curve. if the firm faces demand a, in the long run, you would expect the number of firms in the market to . b. determine which demand curve entails positive economic profits. move the point labeled demand b to identify this curve. if the firm faces demand b, in the long run, you would expect the number of firms in the market to . c. determine which demand curve illustrates zero economic profits. move the point labeled demand c to identify this curve. if the firm faces demand c, in the long run, you would expect the number of firms in the market to

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okpalawalter8 okpalawalter8 · Answer 1 · 2022-12-20T00:57:25+01:00

You would expect the number of firms in the market to decrease as firms exit the market due to negative economic profits.

If the company encounters demand curve b, companies will join the market enticed by positive economic profits in the long term.

Since enterprises are making no economic profit, you would anticipate the number of firms to stay the same.

What is the economic profit?

a) To determine which demand curve entails negative economic profits, we need to find the point where the demand curve intersects the average cost curve. In the graph, the demand curve intersects the average cost curve at a price of approximately $1,000 and a quantity of approximately 3.5 units.

At this point, the firm is earning a price of $1,000 per unit but has average costs of $1,200 per unit, resulting in negative economic profits. In the long run, if the firm faces demand curve a, you would expect the number of firms in the market to decrease as firms exit the market due to negative economic profits.

b) To determine which demand curve entails positive economic profits, we need to find the point where the demand curve intersects the average cost curve. In the graph, demand curve b intersects the average cost curve at a price of approximately $1,400 and a quantity of approximately 5 units. At this point, the firm is earning a price of $1,400 per unit and has average costs of $1,000 per unit, resulting in positive economic profits.

In the long run, if the firm faces demand curve b, you would expect the number of firms in the market to increase as firms enter the market attracted by positive economic profits.

c) To determine which demand curve illustrates zero economic profits, we need to find the point where the demand curve intersects the average cost curve. In the graph, demand curve c intersects the average cost curve at a price of approximately $1,200 and a quantity of approximately 4.5 units. At this point, the firm is earning a price of $1,200 per unit and has average costs of $1,200 per unit, resulting in zero economic profits. In the long run, if the firm faces demand curve c, you would expect the number of firms in the market to remain unchanged as firms are earning zero economic profits.