Microeconomics Wa 3

Top of Form [pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic] DINAH KOFIE WRITTEN ASSIGNMENT 3 1. At its current take of production, a profit-maximizing firm in a free-enterprise(a) trade receives $12.50 for each unit it produces and faces an average broad(a) make up of $10. At the food market charge of $12.50 per unit, the firms peripheral cost carouse crosses the fringy revenue curve at an create direct of gigabyte units. What is the firms current profit? What is apparent to occur in this market, and why? The profit condition for a firm in a utterly competitive labor is given as: Profit = aggregate revenue Total cost, If we divide some(prenominal) the sides by Q, we devil, Profit = (P ATC) X Q, Where, P is the expenditure per unit of the commodity, ATC is the average hail cost and Q is the quantity of output sold. accord to the question, the profit will thus, be, Profit = (12.50 10) X 1000 = $2500.

As there exists positive economic profit in this perfectly competitive industry in the short reach out ( as the price exceeds the average total cost), overbold firms will be attracted to enter the industry. As new firms enter the industry, the total market production increases, this will bring down the market price and thus, result in a f all in dough. This admission of new firms ! will continue till the economic profits in the long run becomes equal to zero, later on which there will be no incentive for any(prenominal) new firm to enter. 2. In indian lodge to narrow down whether time is being spent optimally, a commercial fisher has recorded the avocation information over the past family: minute of arcs spent sportfishing and quantity of fish caught. What is the marginal product of fishing for hour spent? |Hours/day...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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