Chapter 14

Refer to Scenario 14-2. At Q=999, the firm's profits equal

$4,990

Refer to Table 14-5. The maximum profit available to this firm is

$5

Refer to Table 14-1. For a firm operating in a competitive market, the average revenue is

$7

Refer to Table 14-1. For a firm operating in a competitive market, the marginal revenue is

$7

Refer to Table 14-5. In order to maximize profit, the firm will produce a level of output we are marginal cost is equal to

$9

Refer to Table 14-5. In order to maximize profit, the firm will produce a level of output where marginal revenue is equal to

$9

A market is competitive if

(ii) and (iii) only (ii)-each buyer is small compared to the market. (iii)-each seller is small compared to the market

Refer to Figure 14-4. When market prices P2, a profit-maximizing firm's losses can be represented by the area

At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses

A firm that exits it's market has to pay

Neither it's variable costs nor it's fixed costs

Refer to Figure 14-1. If the market price is P2, in the short run, the perfectly competitive firm will earn

Zero economic profits

Refer to Figure 14-4. If the market price is P4, individual firms in a competitive industry will earn

Zero profits in the short run

Refer to Scenario 14-2. At Q=999, the firm's total cost amounts to

$24,980

Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur?

(i) and (iii) only (i)-New firms will enter the market (iii)-in the long run, all firms will be producing at their efficient scale

Refer to Figure 14-6. If the firm is in a short-run position where P<AVC, it is most likely to be on what segment of the supply curve?

AB

Refer to Table 14-1. The price and quantity relationship in the table is most likely that faced by a firm in a

Competitive market

Refer to Figure 14-1. If the market price is P4, in the short run, the perfectly competitive firm will

Earn negative economic profits and will shut down

Refer to Figure 14-1. If the market price is P1, in the short run, the perfectly competitive firm will

Earn positive economic profits

For any competitive market, the supply curve is closely related to

Firms' cost of production in that market

In the long run, a profit-maximizing firm will choose to exit a market when

Total revenue is less than total cost

Refer to Figure 14-4. Firms would be encouraged to enter this market for all prices that

exceed P4