Econ chpt 7 hmw
A firm receives $10 per unit at an equilibrium level of output of 80 units. The average total cost at 80 units of output is $8. The firm makes a total economic profit of:
160$
Who among the following is most likely a price taker?
A Kansas wheat farmer
Productive efficiency occurs in perfect competition because the firm produces at the minimum of the:
average total cost curve
n long-run equilibrium, a perfectly competitive firms produces at the output level at which:
average total cost is minimized.
Under perfect competition, in long-run equilibrium, _____.
the demand curve facing individual firms will fall to the level tangent to the minimum average total cost curve
In a perfectly competitive market, marginal revenue is the same as the market price.
true
The marginal revenue for a perfectly competitive firm equals:
the average revenue at all levels of output.
Which of the following best resembles a perfectly competitive market?
a stock market
Under perfect competition, in long-run equilibrium, _____.
all firms suffer economic losses
Figure 7-1 shows the market demand curve and an individual firm's demand curve in a perfectly competitive market. In Graph A, the market demand has increased from d0to d1and, as a result, _____.
both the market price and the price of the price-taking firm have risen to $6
Figure 7-5 shows cost and revenue curves for a perfectly competitive firm. If P represents the market price for a price-taking firm, the best course of action in the short run for the firm is to:
continue operating because price exceeds average variable cost.
In the short run, if a firm's price is greater than its AVC but less than its ATC, the firm should
continue operating even though it is generating an economic loss.
A firm sells grapefruit in a perfectly competitive market at a price of $1.50 per pound. The firm's marginal revenue:
equal to 1.50$
A firm that is earning zero economic profits has a strong incentive to exit the industry.
false
A perfectly competitive firm faces a perfectly elastic demand curve.
false
Firms should shut down in the short run whenever price is less than the average total cost
false
In short-run equilibrium in a perfectly competitive market, firms always make zero economic profits.
false
Whenever marginal revenue is greater than marginal cost, a profit-maximizing firm should reduce its output.
false
Perfectly competitive firms earn zero economic profits in the long run.
false/true
The perfectly competitive model assumes that:
firms can enter and exit the industry with relative ease.
Beginning from the long-run equilibrium in an increasing-cost industry, if there is a substantial, permanent fall in demand for industry output, _____.
firms will leave the industry, the quantity produced will fall, and prices will end up lower than their initial long-run equilibrium level
If a profit-maximizing firm finds that price exceeds average variable cost and that marginal revenue exceeds marginal cost, it should:
increase its output.
The value of elasticity of the demand curve facing a perfectly competitive firm:
is equal to infinity.
A price-taking firm will tend to expand its output as long as price exceeds average variable cost and:
its marginal cost is less than the market price.
A perfectly competitive firm looking to maximize its profits would want to maximize the difference between:
its total revenue and its total cost.
Figure 7-5 shows cost and revenue curves for a perfectly competitive firm. The short-run _____ for this firm is represented by the area _____.
loss; PABP1
In an increasing-cost industry, an unexpected decrease in demand would lead to a _____ costs and a _____ price in the long run.
lower; lower
A perfectly competitive firm cannot make economic profits in the long run because:
there are no barriers to entry or exit in the industry.
Assume that the equilibrium price in a perfectly competitive industry is $4.25. If a firm in this industry produces and sells 10 units with an average total cost of $5.00, it will:
suffer lose of 7.50
Which of the following is a characteristic of a perfectly competitive industry in long-run equilibrium?
No firm earns an economic profit.
Which of the following is true of perfect competition?
Because perfectly competitive markets have many buyers and sellers, each firm is so small in relation to the industry that its production decisions have no impact on the market price.
Which of the following is true of a perfectly competitive industry?
In a perfectly competitive industry, a firm can determine the quantity of its output.
Productive efficiency requires production at a quantity such that:
MC = ATC.
If the market demand curve in a perfectly competitive industry shifts right, the demand curve for each existing firm will:
shift up.
Figure 7-4 shows the relationship among the various costs of a perfectly competitive firm. In the figure, when the market price equals $54, the firm: Figure 7-4
should shut down.
In a perfectly competitive industry, influence over price is exerted by:
the forces of market supply and demand.
In long-run equilibrium, a perfectly competitive firm produces the output level that minimizes average total cost.
true
It is relatively easy for firms to enter and exit a perfectly competitive market.
true
Perfectly competitive firms earn zero economic profits in the long run.
true
The market demand curve in a perfectly competitive industry is downward sloping, while the demand curve faced by an individual perfectly competitive firm is horizontal.
true