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Intermediate Microeconomics

Robert W. Clower, Philip E. Graves, Robert L. Sexton

Chapter 9

Competitive Price Determination - all with Video Answers

Educators


Chapter Questions

02:04

Problem 1

What is meant by the term "perfect competition"? Is it possible for a situation that does not conform to the assumptions of perfect competition to still be described by the perfectly competitive price theory? Discuss.

Jennifer Stoner
Jennifer Stoner
Numerade Educator
01:20

Problem 2

Does the analysis of pricing in perfectly competitive markets assume that sellers have perfect knowledge of total demand and supply conditions? Explain.

Daniel Cisneros
Daniel Cisneros
Numerade Educator

Problem 3

Explain the concept of a "market period." For what types of products is the concept of the market period, as distinguished from the short-run period, significant?

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06:02

Problem 4

What are the determinants of market period demand and supply?

Jiapeng Guo
Jiapeng Guo
Numerade Educator
04:18

Problem 5

Why will agricultural producers tend to hold their crops off the market if the current price is relatively low? Under what conditions is this behavior unlikely?

Tommy Nguyen
Tommy Nguyen
Numerade Educator
09:40

Problem 6

What is the significance of cost of production for market period excess demand?

Pavitr Ahuja
Pavitr Ahuja
Numerade Educator
01:48

Problem 7

If the current market price is temporarily above the market period equilibrium level, how will it be brought down?

Daniel Cisneros
Daniel Cisneros
Numerade Educator
01:15

Problem 8

What is meant by short-run supply?

Daniel Cisneros
Daniel Cisneros
Numerade Educator

Problem 9

(a) Why must price cover AVC if firms are to continue to operate?
(b) If firms are covering AVC but not all of their fixed costs, will they continue to operate in the short-run period? Why or why not?
(c) Why is it possible for price to remain above average cost in the short-run period?
(d) Why would one expect price to equal marginal cost in the short-run period?

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05:34

Problem 10

What is the relationship between marginal cost and the short-run supply function?

Srikar Katta
Srikar Katta
Numerade Educator
01:48

Problem 11

If market price is above the short-run equilibrium level, by what process will it be brought to the latter? What determines the length of time that this adjustment will take?

Daniel Cisneros
Daniel Cisneros
Numerade Educator

Problem 12

On the basis of the data given below, can you determine the supply schedule of the firm in the short-run period? If not, why not?$$
\begin{array}{cccc}
\hline \text { Output } & \begin{array}{c}
\text { Total } \\
\text { Variable } \\
\text { Cost }
\end{array} & \text { Output } & \begin{array}{c}
\text { Total } \\
\text { Variable } \\
\text { Cost }
\end{array} \\
\hline 1 & \$ 22 & 6 & \$ 85 \\
2 & 32 & 7 & 115 \\
3 & 40 & 8 & 155 \\
4 & 50 & 9 & 205 \\
5 & 65 & 10 & 310 \\
\hline
\end{array}
$$

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00:54

Problem 13

Why does the short-run supply curve slope upward from left to right?

Achintya Suden
Achintya Suden
Numerade Educator
01:48

Problem 14

If long-run adjustments are complete, why will firms in perfectly competitive markets of necessity operate at the point of lowest average cost?

Daniel Cisneros
Daniel Cisneros
Numerade Educator
04:08

Problem 15

Why, in an increasing-cost industry, is the long-run industry supply curve identical to the long-run industry cost curve?

Yang Su
Yang Su
Numerade Educator
01:40

Problem 16

Draw the long-run supply curve for the industry on the basis of the cost data given below: $$
\begin{array}{cc}
\hline \begin{array}{c}
\text { Total Output of } \\
\text { Industry }
\end{array} & \begin{array}{c}
\text { Lowest Average Cost } \\
\text { Figure for Each Firm }
\end{array} \\
\hline 500,000 & \$ 47 \\
1,000,000 & 52 \\
1,500,000 & 55 \\
2,000,000 & 59 \\
2,500,000 & 63 \\
3,000,000 & 66 \\
\hline
\end{array}
$$

Daniel Cisneros
Daniel Cisneros
Numerade Educator

Problem 17

What determines actual long-run output in a constant-cost industry as distinguished from potential output?

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04:49

Problem 18

Under what circumstances in perfect competition is long-run price dependent upon demand considerations alone? Upon cost considerations alone? Illustrate graphically. Which case is most generally relevant?

Md.Daniyal Arshad
Md.Daniyal Arshad
Numerade Educator
02:00

Problem 19

Explain the cobweb model. If you were a farmer producing a product whose price is subject to these fluctuations, what could you do to increase your profits from a long-run standpoint, provided other farmers do not do the same thing?

MB
Matt Bremer
Numerade Educator
02:50

Problem 20

Why do many farm product prices fluctuate greatly from year to year?

Tommy Nguyen
Tommy Nguyen
Numerade Educator