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Solved: Given find the exact value of

College Algebra and Trigonometry | 7th Edition | ISBN: 9781439048603 | Authors: Richard N. Aufmann ISBN: 9781439048603 155

Solution for problem 28 Chapter 5

College Algebra and Trigonometry | 7th Edition

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College Algebra and Trigonometry | 7th Edition | ISBN: 9781439048603 | Authors: Richard N. Aufmann

College Algebra and Trigonometry | 7th Edition

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Problem 28

Given find the exact value of

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Four Market Models - Pure competition - entails a large number of firms, standardized product, and easy entrance by new firms - At the opposite extreme, pure monopoly has one firm that is the sole seller of a product or service with no close substitutes; entry us blocked for other firms - Monopolistic competition - is close to pure competition, except that the product is differentiated among sellers rather than standardized product - An oligopoly is an industry in which only a few firm exist, so each is affected by the price Pure Competition: Characteristics and Occurrence - The characteristics of pure competition: • Pure competition is rare in the real world, but model is important - Model helps analyze industries with characteristics similar to pure competition - Model provides a context in which to apply revenue and cost concepts developed in previous chapters - Pure competition provides a norm against which to compare and evaluate the efficiency of real world • Many seller means that there are enough so that a single seller has no impact on price by its decisions alone • The products in a purely competitive market are homogeneous/standardized, each seller’s product is identical to its competitor’s • Individual firms must accept the market price; they are takers and exert no influence over price - There are four major objectives to analyzing pure competition • To examine demand from the seller’s P.O.V. • See how a competitive producer responds to market price in the short run Explore nature of long run adjustments in a competitive market • • Evaluation efficiency of competitive industries Demand as Seen by a Purely Competitive Seller - Individual firm will view its demand as perfectly elastic • Demand sure isn’t perfectly elastic for the industry: only appears that way for individual firm Average, Total, and Marginal Revenue - Average Revenue- price per unit for each firm in pure competition - Total revenue- Price x quantity sold - Marginal Revenue - change in total revenue and will also equal unite prince in conditions of pure competition Profit Maximization in Short Run: Two Approaches - In the short run a firm has fixed plant and maximizes profits or minimizes losses by adjusting output; profit=TC-TR - Three Questions that must be answered • Should firm produce • If so, how much • What will be the profit/loss - Firm shit down if the losses are greater than the fixed cost - MR=MC rule means that the firm will maximize profits/minimize losses by producing at a point which MR=MC in the Short Run Three features of this MR=MC rule are important • - Tule assumes that MR is less than or equal to the minimum average variable cost or firm will shut down - Rule works for firms in any type of industry - Price=MR - Determining equilibrium price for a firm and an industry • Total-supply and total-demand data must be compared to find the most profitable price and output levels Firms Vs. Industries - Firm vs. industry: individual firms must take price as given, but the supply plans of all competitive producers as a group are a major determinant of product price

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Chapter 5, Problem 28 is Solved
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Textbook: College Algebra and Trigonometry
Edition: 7
Author: Richard N. Aufmann
ISBN: 9781439048603

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Solved: Given find the exact value of