Micro ch 8
Refer to the data in Figure 22.1. The total fixed costs for this firm are approximately
$50 The total fixed cost is $50 because total cost is $50 at 0 units of output.
Refer to figure 22.3 for a perfectly competitive firm. The law of diminishing returns takes effect at an output of
13
Refer to the data in figure 22.1. The profit-maximizing output for this firm is
200 units
A firm that makes zero economic profits
Covers all its costs, including a provision for normal profit.
The demand curve confronting a competitive firm is
Equals the marginal revenue curve.
A perfectly competitive firm should expand output when
P>MC
perfectly competitive firm is a price taker because
The price of the product is determined by many buyers and sellers.
A firm maximizes profit when
Total costs exceed total revenue by the largest amount
marginal revenue is the change in
Total revenue when output is changed.
For a perfectly competitive firm, marginal revenue is always
constant
The demand curve for each perfectly competitive firm is
horizontal
Short-run profits are maximized at the rate of output where
marginal revenue is equal to marginal cost
normal profit
the accounting profit earned when all resources earn their opportunity cost
Competitive firms cannot individually affect market price because
Their individual production is insignificant relative to the production of the industry.