Rana sells 95 bouquets for $285 and Sam sells 100 bouquets for $290. Who is selling at a better dealRequired to answer. Single choice.
Answers
Answer:
Why are perfectly competitive firms described as "price-takers"
It is a result of the necessary conditions of perfect competition. Because each firm produces such a small share of the total industry output and because the firm's product is no better than the products of rival firms, these firms have no ability to set the price. Under these conditions, the firm can take no action that affects the market price.
Sam is one of many potato growers who sell potatoes to a large food-processing plant. The price of a bushel of potatoes is $4, and Sam sells 100 bushels at that price. He has $250 of fixed cost. Sam figures if he produces one more bushel of potatoes, his total variable costs will increase from $175 to $180. Should Sam produce any more potatoes at $4? Explain. Will he earn a positive economic profit? Show how you came to your answer.
Since Sam's variable cost is $175 at 100 bushels, his average variable cost is $1.75 per bushel. He earns $4 from the sale of the last bushel, so he should continue to produce 100 bushels. The next bushel has a marginal cost of $5, so he should not produce 101 bushels. His economic profit is equal to $4 × 100 - $175 - $250 = a loss of $25.
A perfectly competitive industry is in long-run equilibrium. Now suppose that firms in the industry experience a decrease in fixed costs. Describe how this change will affect short-run economic profits. How will this industry adjust in the long run?
The decrease in fixed costs shifts the ATC curve downward so that short-run profits are now positive. These positive profits will eventually attract the entry of new firms, which will shift the short-run industry supply curve to the right. Market price will fall until P = ATC and firms are again taking zero economic profits.
Explain how the long-run perfectly competitive equilibrium is efficient.
Consumers and producers are price-takers in the market. The price in the market is equal to the marginal cost of producing the good. This tells us that all consumers whose willingness to pay is greater than or equal to the price are able to purchase the good. All sellers who have a marginal cost less than or equal to the price are able to sell the good. Because P = MC, all possible transactions are made
Step-by-step explanation:
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Answer:
Sam is providing a better deal because he is providing more bouquets than Rana that too at a lesser cost
Step-by-step explanation:
Cost of 1 bouquet sold by Rana = 285/95 = 3
Cost of 1 bouquet sold by Sam = 290/100 = 2.9
Thus, Sam is providing a better deal