Microecon_Ch15

The figure above shows a perfectly competitive firm. If the market price is $20 per unit, then the firm produces ________ units and makes an economic profit that is ________.

30; zero

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. Based on the figure above, what is the price of a can?

$3.00 per can

In the long run, perfectly competitive firms produce at the output level that has the minimum

average total cost.

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23. The firm's average total cost is $20. What is the firm's total cost?

$1,000

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firm's total revenue?

$1,150

For a syrup producer in central Vermont, profit is maximized at the level of output for which total

revenue exceeds total cost by the largest amount.

In the short run, a perfectly competitive firm

might make an economic profit, zero economic profit, or incur an economic loss.

Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold. The above table shows costs for a perfectly competitive producer of computer memory chips. This firm will produce as long as the market price of a wafer is above

$1,300.

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping.

For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the

average total cost curve shifts upward.

In part, perfect competition arises if i) each firm's minimum efficient scale is large relative to demand. ii) each firm produces a good or service identical to those produced by its many competitors. iii) there are significant barriers to entry.

ii only

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10. In the long run, definitely

the number of firms is more than 10,000.

For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is

the same as its demand curve.

For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is

upward sloping.

Suppose Pat's Paints is a perfectly competitive firm. If Pat's Paints' marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat's total revenue equals

$500.

The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. When Omar produces 2 bushels of rutabagas, his total profit equals

-$8.

The above figure illustrates a perfectly competitive firm. Curve A represents the

MR curve.

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

average variable costs.

The above figure shows some a firm's cost curves and its marginal revenue curve. The price for the shutdown point is ________.

between $0 and $2.99

Perfect competition is characterized by all of the following EXCEPT

considerable advertising by individual firms.

A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will

continue producing the same quantity as before but will make less economic profit.

If the market price is lower than a perfectly competitive firm's average total cost, the firm will

continue to produce if the price exceeds the average variable cost.

The figure above shows some of a firm's cost curves and its marginal revenue curve. Suppose the price of a can was $5.10. In this case, to maximize its profit, the firm illustrated in the figure above would

decrease its production and would make an economic profit.

The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

decreased; made zero economic profit

Suppose the cost of a CD is $20. As online retailers enter the market with new technology, the price of CDs ________, and traditional music stores find that ________.

decreases; their AVC exceeds the new lower price and they exit the industry

A perfectly competitive firm will maximize profit when the quantity produced is such that the

firm's marginal revenue is equal to its marginal cost.

If demand for a seller's product is perfectly elastic, which of the following is true? i. The firm will sell no output if it sets the price its product above the market price. ii. There are many perfect substitutes for the seller's product. iii. The firm will sell no output if it sets the price its product below the market price.

i and ii

In the short run, a perfectly competitive firm can experience which of the following? i. an economic profit ii. an economic loss but it continues to stay open iii. an economic loss equal to its total fixed cost when it shuts down

i, ii, and iii

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. Suppose the price of a can was $5.14. In this case, to maximize its profit, the firm illustrated in the figure above would

increase its production and would make an economic profit.

Consider a perfectly competitive market experiencing good times. In the short run, the equilibrium price will ________ and firms will earn a(n) ________.

increase; economic profit as the new price exceeds average total cost

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, as it increases its output, its profit ________ and the price it can charge for its product ________.

increases; does not change

If perfectly competitive firms are maximizing their profit and are making an economic profit, the market ________ in a short-run equilibrium and ________ in a long-run equilibrium.

is; is not

For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because

individual perfectly competitive firms cannot influence the market price by changing their output.

A perfectly competitive firm's short-run supply curve is

its marginal cost curve above the AVC curve.

If firms in a perfectly competitive industry are earning an economic profit, then in the ________, firms will ________ the industry.

long run; enter

The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1, each produce 30 units, and the market price of the good is $16 per unit, then the firms

make zero economic profit and firms neither enter nor exit the industry.

In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

making zero economic profit.

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should

not produce this additional batch.

In which market structure is there a large number of firms producing slightly differentiated products?

only monopolistic competition

In a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do?

produce less output to make more profit

Catfish farming is a perfectly competitive industry. Catfish farmers suffered tremendous economic losses in the late 2000s. As a result,

some catfish farmers exited the market.

Consider a short-run equilibrium in a perfectly competitive market. Suppose that the firms' average total cost and marginal cost schedules differ. In the short run,

some firms might incur an economic loss, but still produce output.

Technological change brings a ________ to firms that adopt the new technology.

temporary economic profit