We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Micro26isa - Essay Example

Comments (0) Cite this document
Summary
Name Instructor Course Date Microeconomic of the firm 1. Price Taking (10 points) We assume that competitive firms are "price takers." Explain what this means. What is keeping competitive firms from setting prices? Is this a plausible assumption? For which industries is it a likely assumption?…
Download full paperFile format: .doc, available for editing
Polish This Essay94.4% of users find it useful
Micro26isa
Read TextPreview

Extract of sample
"Micro26isa"

Download file to see previous pages In this respect, the firms only have the option of working with the prevailing price or lower. This constitutes what taking price is. There are various assumptions that compel the firms in this market to take prices. Sellers and buyers are many and any action towards increasing prices will only worsen sales through migration of buyers. Products are homogeneous and change of price will only divert buyers to get the same products from other firms selling at the prevailing or lower prices. These assumptions play a significant role in pushing firms to take the market prices or fail. Some of the industries with such assumptions include clothing and textile, Cosmetics, electrical and electronics industry among others. Some industries like medicine and drugs, energy among others cannot accommodate these assumptions hence exhibit other market structures. 2. Shut-down Point for a Firm (20 points) When will the competitive firm shut down in the short run? When will it incur a loss but continue to produce? Draw a graph showing each scenario and explain. It is important to note that shut down point is the level of output and price where the firm can just cover its total variable cost. Some of the key issues to consider in determining this point include; relative position of the average variable cost which is always at its minimum for this condition. Where the marginal cost curve crosses the average variable cost curve also sums up to shut down of the firm. At this point, the producer is indifferent between producing and temporarily shutting down. The firm incurs a loss from either action. In the event that market prices fall below the firm’s average variable cost, temporary shutdown is preferable in the short run. In case the firm continues to produce, losses from its operation merely add to losses that results from the firm’s fixed costs and shut down will lead to slump in losses. Figure 1 : Shut down when P < AVC ATC Price MC AVC P = MR Quantity A price taking firm that intends to remain operational will minimize losses or maximize profit if it will be able to produce the output level at the point where P = MC and variable costs are also covered. In this case, the portion of the firm’s short run marginal cost curve which lies above its average variable cost becomes the short-run curve of the firm. Figure 2: retrieved on May 13, 2013 from: http://www.analystnotes.com/notes/subject.php?id=119 Considering the grahp above, in case the price is below P1, the firm should shut down its operation. Long-Run Cost Curve, Economies of Scale, and Firm Size (15 points, 5 points each) A. Explain how economies of scale and the long-run cost curve influence firm size and firm concentration. The theoretical presentation starts with the short-run and shows the average cost curves (Total, fixed and variable) along with the marginal cost. The curves are presented in Figure 1 MC ATC cost in $ AVC AFC Quantity Figure 1. Short-run unit cost curves: marginal cost (MC), average total cost (ATC), average variable cost (AVC) and average fixed cost (AFC). The short-run cost curves are normally based on a production function with one variable factor of production that displays first increasing and then decreasing marginal productivity. Increasing marginal productivity is associated with the negatively sloped portion of the marginal cost curve, while decreasing marginal productivity is associated with the positively sloped port ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Micro26isa Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1478210-micro26isa
(Micro26isa Essay Example | Topics and Well Written Essays - 1000 Words)
https://studentshare.org/macro-microeconomics/1478210-micro26isa.
“Micro26isa Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/macro-microeconomics/1478210-micro26isa.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Political Economy In The World: Rebirth Or Failure
Political boundaries, economic boundaries. Apparently distinct and separate, but actually living in perfect symbiosis. Economic boundaries change abruptly and this is due to the fact that today we have an increasingly evolved world with an increasing number of technological services on offer.
4 Pages(1000 words)Essay
Cruise Industry
The available data and analysis suggest that CCL hold more promise to invest and hence it is recommended that 100% of the amount to be invested into CCL. These recommendations are based upon the assumptions and facts that CCL has been able to reinitiate its quarterly dividends.
13 Pages(3250 words)Research Paper
History of Film Genres
We have paid little to no attention to the so-called movie genres because to the untrained eye, a movie is a movie. Once a person has a good laugh, a heart warming cry, a spine tingling reaction, or an adrenalin rush from escaping the baddie or the unknown, it does not really matter to a person what genre of film he is watching.
5 Pages(1250 words)Essay
Getting Ready To Start Business
Landlines in the office are optional with the advent of high-speed internet via cable. Either by land line or wireless there needs to be communications from the office. Other communications services and devices to consider are: cordless phone, speaker phone, multiple-line phones, and fax, answering machine, pager and palm organizers.
2 Pages(500 words)Essay
Information Technological Change and Innovation
The impact of technological change and innovation is not a recent phenomenon. Technology, from the Greek words techné (useful knowledge) and logos (study), can be understood as the application of useful knowledge to everyday life and has acted as a main driver of change in the world. Consider the simple example of fire.
13 Pages(3250 words)Essay
What are the essential aspects of melodrama
Punishment of those who violated social codes was harsh.1 Melodrama was melodic drama, where entertainment was the key factor, and music served to heighten emotion. On
4 Pages(1000 words)Essay
Cover Letter for a Master
These courses include Principles of Marketing, Applied Marketing Management etc. I have always been waiting relentlessly to step out in this meritocratic world. Therefore, in order to gain experience and to earn a living I have
1 Pages(250 words)Assignment
Tips for Trainers
The considered article describes them as chatterboxes, introverts, know it all, challengers and slow learners. Hence there is only one type not mentioned in
1 Pages(250 words)Research Paper
Textbook Responses
Student readiness enables them to be fast learners while at school. For instance, in every grade at school, there is a level of expectation from every student in class by their
1 Pages(250 words)Book Report/Review
Author Study
Plunging into the world of Brady Udall is always an adventure of a lifetime, an unforgettable one. Brady Udall himself expresses his for how and why he writes as following: “Fiction, at its core, is an
6 Pages(1500 words)Essay
Let us find you another Essay on topic Micro26isa for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us