Ch.10 Mircoeconomics

Refer to the short un data in the accompanying graph. The profit maximizing output for this firm is 100 units above 440 units 440 units 320 units

320 units

Refer to the diagram for a purely competitive producer. The firms short run supply curve is

the bcd segment and above on the MC curve

The MR = MC rule applies

to firms in all types of industries

A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its

Total variable costs

a purely competitive seller is

a price taker

According to the accompanying diagram, at the profit maximizing output total fixed cost is equal to OCFE OAHE BCFG OBGE

BCFG

Refer to the diagram for a purely competitive producer. The firm will produce at a loss at all prices Below P2 Below P1 Below P3 Between P2 and P3

Between P2 and P3

the short run supply curve of a purely competitive producer is based primarily on

MC Curve

A competitive firm in the short run can determine the profit maximizing (or loss minimizing) output by equating

marginal revenue and an marginal cost

When a form is maximizing profit, it will necessarily be

maximizing the difference between total revenue and total cost

An industry comprising 40 frms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

monopolistic competition

An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called:

oligopoly

Which of the following characteristic of a purely competitive seller's demand curve

price and marginal revenue are equal at all levels of output

Which of the following is not a characteristic of pure competition

pricing strategies by firms

Firms seek to maximize

total profit

For a purely competitive seller, price equals

Averga e revenue, marginal revenue, total revenue divided by output (all of these)

Refer to the diagram for a purely competitive producer. The lowest price at which the form should produce (as opposed to shutting down) is P1 P2 P3 P4

P2

Suppose you find that the price of your product is then minimum AVC. You should

Close down because, by producing, your losses will exceed your total fixed costs

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

Downsloping, perfectly elastic

Refer to the accompanying diagram. At the profit- maximizing output - total revenue will be ABGE OBGE OCFE OAHE

OAHE

According to the accompanying diagram, at the profit maximizing output, total variable cost is equal to ABGH OAHE OBGE OCFE

OCFE

A perfectly elastic demand curve implies that the firm

can sell as much output as it chooses at the existing price

A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:

produce because the resulting loss is less than its TFC

In which of the following industry structures is the entry if new firms the most difficult

pure monopoly

The data in the accompanying table indicates that this firm is selling its output in an

purely competitive market