Chapter 10, Firm production under idealized competitive conditions Video Solutions, Microeconomics for MBAs : the economic way of thinking for managers

Problem 1

Draw the short-run average and marginal cost curves, plus the demand curve, for a perfect competitor. Give the firm's demand, and identify the short-run production level for a profit-maximizing firm. Identify the profits.

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Problem 2

On your graph for question 1 , indicate with a $P_m$ the minimum price the firm requires in order to continue short-run operations.

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01:18

Problem 3

On your graph for question 1, darken the firm's marginal cost curve above its intersection with the average variable supply cost curve. Explain why that portion of the marginal cost curve is the firm's supply curve.

Srikar Katta

Numerade Educator

Problem 4

Why does a perfectly competitive firm seek to equate marginal cost with marginal revenue rather than to produce where average total cost is at a minimum?

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03:34

Problem 5

If perfectly competitive firms are making a profit in the short run, what will happen to the industry's equilibrium price and quantity in the long run?

Jonathan Tapiwa

Numerade Educator

01:01

Problem 6

Suppose the market demand for a product rises. In the short run, how will a perfect competitor react to the higher market price? Draw a graph to illustrate your answer. What will happen to the market price in the long run? Why?

Lucas Finney

Numerade Educator

01:57

Problem 7

Suppose that you know absolutely nothing about price and cost in a particular competitive industry. How could you nevertheless determine whether the typical firm in the industry was making economic profits or losses?

Mihir Nayar

Numerade Educator

01:28

Problem 8

Suppose a manager were to refuse to provide a fringe benefit that could lower the wages of their workers, but which on balance benefited workers. Why has this manager prevented the firm's average cost curves from being as low as possible?

Daniel Cisneros

Numerade Educator

Problem 9

When should a firm eliminate fringe benefits?

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Problem 10

What points made in the discussion of teams in the chapter are applicable to your study teams? Does your university allow students to move among teams? Why or why not? How might the prospects of switching teams affect team performances? Should students be able to make monetary side-payments to students in other teams to switch teams?

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Problem 11

Shoney's, Coco's, and Hof's Hut (names that may now be unfamiliar to many students) were widely recognized restaurant brands that in the 1990 s began to lose market share in Southern California and elsewhere to Outback Steakhouse, Panera Bread café, and Claim Jumper (with the last restaurant chain collapsing in the 2010s). What are the benefits and problems of having a well-established restaurant brand? Should restaurants try to rebrand themselves when they start losing market share? Have Outback, Panera's, and Claim Jumper faced innovator's dilemma problems? What about Microsoft?

James Kiss

Numerade Educator

02:21

Problem 12

In the 1990s, "re-engineering" of firms became a management catch phrase, suggesting that from time to time firms need to reinvent themselves from their core business competencies outward. What does the "innovator's dilemma" have to say about re-engineering?

Ethan Renner

Numerade Educator

Problem 13

In which market structure - perfect competition, monopolistic competition, oligopoly, or monopoly - are individual firms the least likely to be innovative, meaning inclined to create and upgrade their product lines?

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