Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 13, Problem 6CQQ
To determine
The policy affects the consumption in the short run and in the long run.
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Students have asked these similar questions
explain your answers in detail and use graphs
whenever appropriate:
The market for rental cars is very competitive.
How would the following developments affect
the quantity of car rentals that a typical rental
car company wants to supply in the short run?
a. With the easing of fears about Covid 19,
people are more excited to travel than before.
b. Local governments reduce the yearly fee
that rental car companies have to pay for their
facilities. Note, these fees do not vary with how
many cars the company rents.
c. Rental car companies have to pay higher
wages for their workers.
Suppose that initially the market for rental cars
is in long-run equilibrium.
a. What does the fall in the yearly fee rental
car companies have to pay for their facilities
do to the profits of a typical rental car
company in the short run?
b. What will happen to the equilibrium price
and quantity of rental cars in the long run?
Why? What will happen to the profits of a
typical rental car company in the long run?
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
A. keep producing in the short run but exit the market in the long run.
B. shut down in the short run but return to production in the long run
C. shut down in the short run and exit the market in the long run.
D. keep producing both in the short run and in the long run.
Edward Scahill produces table lamps in the perfectly competitive desk lamp market. The equilibrium price of lamps is $50.
a. Fill in the blanks in the table for total revenue and marginal revenue, as represented by (i and ii). (Enter your responses
as integers.)
(1) Total revenue is $.
(ii) Marginal revenue is $.
b. How many table lamps will Edward produce to maximize profit? lamps.
c. If next week the equilibrium price of desk lamps drops to $30, should Edward shut down?
O A. Yes because he is not covering his fixed costs.
OB. Yes because price is less than ATC.
OC. No because price is greater than minimum AVC.
D. No because he is covering his fixed costs and some of his AVC.
Output per Total Costs Marginal
week
Cost
0
1
2
3
4
5
6
7
8
9
$120
150
170
185
195
215
260
310
385
495
$30
20
15
10
20
45
50
75
110
Total Marginal
Revenue Revenue
SO
50
100
(1)
200
250
300
350
400
450
$50
50
50
(if)
50
50
50
50
50
Chapter 13 Solutions
Essentials of Economics (MindTap Course List)
Ch. 13.1 - Prob. 1QQCh. 13.2 - How does a competitive firm determine its...Ch. 13.3 - Prob. 3QQCh. 13 - Prob. 1CQQCh. 13 - Prob. 2CQQCh. 13 - Prob. 3CQQCh. 13 - Prob. 4CQQCh. 13 - Prob. 5CQQCh. 13 - Prob. 6CQQCh. 13 - Prob. 1QR
Ch. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - A firm in a competitive market receives 500 in...Ch. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Suppose that each firm in a competitive industry...
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