Ch. 23 - Competitive Markets

Refer to figure 23.1 for a perfectly competing firm. In the long run, this firm would stay in this market only if the market price was equal or higher than

$15

Refer to figure 23.1 for a perfect competitive form. This firm should shut down in the short run if the market price is below

$5

Which of the following is characteristic of a perfectly competitive market?

A large number of firms

Refer to figure 23.6 for a perfectly competitive firm. If this firm produces the level of output corresponding to point B in the short run, it will earn

A loss greater than necessary.

In a perfectly competitive market, when price is equal to the

Minimum average total cost, economic profit is zero.

Economic losses are a signal to producers

That they are not using resources in the best way.

Refer to figure 23.5 for a perfectly competitive firm. If more efficient production techniques were developed in this market, which of the following changes would we expect to occur, ceteris paribus?

The ATC, MC, and market price would all decrease.

If someone invents a more cost effective way to produce frozen pizzas, then

The market supply curve for frozen pizzas will shift to the right.

If two products are homogeneous, then they

are identical

Marginal cost is the increase in total cost associated with a one-unit

increase in production