Assignment (Microeconomics) Example | Topics and Well Written Essays - 500 words

(Micro economicals) - Assignment ExampleBut since increase in quantity produced raises marginal cost, producer of butter would raise its hurt to keep up with the increased marginal cost (to maximize profit). Thus, price begins to rise. Now, if the demand for butter drops, producer would cut their production and thus the marginal cost again decreases and they stinkpot lessen the price too because now the profit maximizing condition (MR = MC) can be convenient at the lower price. Question 3 In a perfectly emulous manufacture, economic gelt disappear in the long run because entry and exit of a firm is free of barriers which allows the tally of firms to remain up to the level of zero economic profits as opposed to an imperfectly completive industry where entry barriers prevent other firms from entering the industry and thus from exhausting the profits. For a perfectly competitive industry, economic profit attracts the new suppliers in the market as they can freely enter. New entr ies is keep until ATC = price. This is because if ATC price (positive profit), more firms will enter and thus absorb the profit and if ATC price, firms will shut follow through in long run (as exit is also free in perfect competition) to avoid the economic loss and thus price and ATC again becomes equal zero economic profit. Question 4 hypothecate the firm is a profit-maximizing firm.