Econ (Micro) Ch9
True or False: Charges that are paid for factors of production are called implicit costs.
False
True or False: If P > ATC the firm will shut down.
False
True or False: If an industry experiences constant costs, the long-run industry supply curve will be downward sloping.
False
True or False: If price falls below the minimum of ATC, the firm will shut down in the short run.
False
True or False: In perfect competition P > MR.
False
If a perfectly competitive firm is producing a quantity that generates MC < MR, then profit:
can be increased by increasing production
True or False: As output increases the slope of the total revenue curve does not change.
True
True or False: Total economic profit is (price minus average total cost) times quantity.
True
true or False: Economic profit in long-run equilibrium in perfect competition is zero.
True
For a firm in a perfectly competitive market:
marginal revenue equals price and average revenue.
Suppose that some firms in a perfectly competitive industry are earning positive economic profits. In the long run, the:
number of firms in the industry will increase.
If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the:
number of firms in the industry will not change.
Economic profit:
(per unit) is price minus average total cost
In the short run, a perfectly competitive firm produces output and incurs an economic loss if:
AVC < P < ATC
Charges that are paid for factors of production are called:
Explicit costs
The profit-maximizing level of output for a perfectly competitive firm occurs where:
MR=MC
The slope of the total cost curve is:
Marginal cost
In the short run, if P=ATC, a perfectly competitive firm produces _________ and earns _____________.
Output, zero economic profit
In the long run, provided that there are no external benefits or costs, perfect competition will result in an efficient allocation of resources because:
P = MC
In the short run, a perfectly competitive firm produces output and earns an economic profit if:
P > ATC
Provided that there are no external benefits or costs, resources are efficiently allocated when:
P=MC
Individuals in a market who must take the market price as given are:
Price takers
An increase in demand in a perfectly competitive market will cause a(n):
Temporary increase in price in a constant-cost industry.
The most profitable level of output occurs where...?
The MR (aka market price) and MC curve intersect
A firm's total output times the price at which it sells that output is:
Total revenue
Economic profits in a perfectly competitive industry induce _______ , and losses induce _______ .
entry, exit
If firms are experiencing economic losses in the short run, firms will leave the industry and industry output will _______ and economic losses will _______ in the long run.
fall, fall
Price takers are individuals in a market who:
have no ability to affect the price of a good in a market.
Marginal revenue is a firm's:
increase in total revenue when it sells an additional unit of output.
Firms in the model of perfect competition will:
increase output up to the point that the marginal benefit of an additional unit of output is equal to the marginal cost
If a perfectly competitive firm is producing a quantity that generates P<MC, then profit can be increased by...?
increasing production
The marginal revenue received by a firm in a perfectly competitive market:
is equal to its average revenue.
The price received by a firm in a perfectly competitive market:
is equal to the market price.
In a perfectly competitive industry, economic profit:
is found by using cost in the economic sense of opportunity cost.
If a perfectly competitive firm is producing a quantity that generates MC = MR, then profit:
is maximized
When economic profits in an industry are zero:
it means that firms are doing as well as they could do in other markets.
A perfectly competitive firm's marginal cost curve above the average variable cost curve is its:
short-run supply curve.
If price is less than average variable cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:
shut down production.
Economic profit is maximized when:
the slope of the total revenue curve is equal to the slope of the total cost curve.