ECON HW 13

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Quantity sold . Price 5 $15 6 $15 7 $15 In the above​ table, if the quantity sold by the firm rises from 5 to​ 6, its marginal revenue is

$15

Quantity . TFC . TVC 8 500 800 9 500 1000 10 500 1250 The table shows some of the costs for a perfectly competitive firm. The firm will produce 9 units of output if the price per unit is

$200

In the​ figure, the​ firm's total economic profit is equal to

$60

Quantity sold . Price 5 $15 6 $15 7 $15 In the above​ table, if the firm sells 5 units of​ output, its total revenue is

$75

Consider the perfectly competitive firm in the figure. The profit maximizing level of output for the firm is equal to

17 units.

A firm that shuts down and produces no output incurs a loss equal to its

total fixed costs.

Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is​ $24. The marginal cost of producing a second hat is​ $26 and the marginal cost of producing a third hat is​ $28. The market price of a hat is​ $26. To maximize​ profit, Tammy produces​ ________ a day.

2 hats

In the​ figure, the firm will produce

20 units.

The shortminus−run supply curve for a perfectly competitive firm is its marginal cost curve above the minimum point on the

average variable cost curve.

In the​ figure, the line represented by the​ "2" is the

average variable cost.

A perfectly competitive​ firm's shortminus−run supply curve is the same as its

MC curve above the minimum of the AVC curve.

Which of the following is always true for a perfectly competitive​ firm?

P ​= MR

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

average variable cost.

In perfect​ competition, the market demand for the good​ ________ perfectly elastic and the demand for the output of one firm​ ________ perfectly elastic.

is​ not; is

The section of the marginal cost curve that lies above the average variable cost curve is

a perfectly competitive​ firm's supply curve.

In perfect​ competition, each individual firm faces​ ________ demand curve.

a perfectly elastic

The shortminus−run supply curve for a perfectly competitive firm is its marginal cost curve

above its shutdown point.

Perfect competition implies that

all firms are producing the same identical product. all firms are price takers. there are many firms in the industry.

In perfect​ competition,

all firms in the market sell their product at the same price.

Consider the perfectly competitive firm in the figure. At the profit maximizing level of​ output, the firm is earning

an economic loss equal to​ $119.00.

An example of a perfectly competitive firm is

an oat farmer in the United States.

A perfectly competitive firm maximizes its profit by

choosing to produce the quantity that sets MC equal to MR.

In perfect​ competition, an individual firm

determines the quantity it sells in the marketplace but has no influence over its price.

If the price exceeds the average variable​ cost, by producing the level of output such that marginal revenue equals marginal​ cost, the firm ensures that it will

earn the largest profit possible.

A perfectly competitive industry is characterized by

easy entry into the industry.

In perfect​ competition, the marginal revenue of an individual firm

equals the price of the product.

The costs incurred even when no output is produced are called

fixed costs.

In perfect​ competition, each firm​ ________.

is a price taker

In perfect​ competition, the​ firm's marginal revenue curve

is the same as its demand curve.

A perfectly competitive firm shuts down if the price of its product is

less than its minimum average variable cost.

In the​ figure, the line represented by the​ "4" is the

marginal cost.

The​ firm's supply curve is its

marginal cost​ curve, at all points above the minimum average variable cost curve.

A perfectly competitive​ firm's economic profit is maximized by producing the amount of output such that

marginal revenue equals marginal cost.

In the​ figure, the line represented by the​ "1" is the

marginal revenue.

A perfectly competitive firm maximizes its economic profit if it produces so that

marginal revenue​ = marginal cost.

A perfectly competitive firm will shut down rather than produce if its

price is less than average variable cost.

If the price of its product falls below the minimum point on the AVC​ curve, the best a perfectly competitive firm can do is to

shut down and incur an economic loss equal to its total fixed cost.

Consider the perfectly competitive firm in the figure. What will the firm choose to do in the shortminus−run and​ why?

stay in business because the​ firm's economic loss is less than fixed costs

In perfect​ competition, the price of the product is determined where the market

supply curve and market demand curve intersect.

Marginal revenue is defined as

the change in total revenue that results from a one

A perfectly competitive firm will operate and incur an economic loss in the short run if

the loss is smaller than its total fixed costs.

An example of a perfectly competitive industry is

the market for corn in the United States.

In perfect​ competition, ________.

there are many firms that sell identical products

Firms in perfectly competitive industries have a​ ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a​ ________.

​horizontal; price taker


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