CH 13 Review No Credit

Which of the following is a true statement about perfectly competitive industries?

Individual firms have no impact on price.

Which of the following is not a reason why the long-run supply curve for a perfectly competitive industry might slope upward?

Technological change may lower costs for all firms.

Suppose an individual firm is one of many firms in a perfectly competitive market. Which of the following describes why this means that the firm's marginal revenue will be equal to the market price?

The firm can always sell one more unit at the existing market price.

Average revenue is defined as:

(P × Q)/Q.

Which of the following best describes the long-run supply curve?

A horizontal line at minimum ATC

For a perfectly competitive industry with identical firms, the long-run industry supply curve is: perfectly elastic horizontal based on minimum average costs all the above

All of these are characteristics of the long-run supply curve.

A market is in long-run equilibrium and firms in this market have identical cost structures. Suppose demand in this market decreases. Which of the following will happen to the market quantity as the market leaves and then returns to long-run equilibrium?

Equilibrium market quantity will decrease.

Suppose that firms in an industry have identical cost structures and the industry is in long-run equilibrium. Which of the following explains how the profit motive could lead to lower market prices?

Firms will be motivated to find innovative ways to reduce costs at the current market price.

A firm's short-run supply curve is the same as its:

MC curve at quantities after it intersects the AVC curve

In the market for gold jewelry (unlike the market for gold ore), products come in a range of designs, styles, and levels of quality. Which of the following characteristics of a competitive market is violated in the jewelry market? What does this imply for consumers' willingness to buy from different producers?

The goods are not standardized; Consumers are more willing to shop around for a better price.

Which of the following is a true statement about the long-run supply curve for a perfectly competitive industry?

The long-run supply curve shows the minimum cost for the last firm to enter the industry.

Corn farmers in Iowa are producers in a highly competitive global market for corn. They also have some of the most fertile, productive land in the entire world. Could Iowa's farmers be earning a positive economic profit in the long run?

Yes, as long as the Iowa farms differ enough in cost structure compared to the rest of the world.

In the long run, firms in a perfectly competitive market earn zero <blank> profit but can be earning positive <blank>

economic; accounting

The short-run market supply curve is:

found by adding the quantities of all firms in the market.

In a perfectly competitive market in the short run, an increase in demand causes equilibrium price to:

increase and the equilibrium quantity to increase.

You stop by a crafts fair and you notice consumers haggling with vendors over prices. Suppose you plan to go to a farmers' market next, where you expect to find <blank> haggling compared to the crafts fair. This is because <blank>, and so the craft fair is <blank> than the farmers market

less; unlike the farmers market, the crafts fair does not sell standardized goods; less competitive than

Other things equal, the short-run market supply curve is upward sloping because each firm supplies:

more as the price rises.

A restaurant owner is trying to decide whether to stay open at lunchtime. She has far fewer customers at lunch than at dinner and the revenue she brings in from lunch covers her expenses to buy food and pay the staff, but not much more. The restaurant owner should:

open for lunch, as the extra revenue from staying open covers the variable costs of staying open for lunch.

The only choice that a perfectly competitive firm can make to affect its profits is to decide the:

quantity of output to produce.

Suppose the market for gourmet chocolate is in long-run equilibrium, and an economic downturn has reduced consumer discretionary incomes. Assume chocolate is a normal good, and the chocolate producers have identical cost structures. a. demand will shift b. profits for chocolate producers in the short run will c. Chocolate producers will <blank> the market The long-run supply curve will

shift left decrease exit not change

The short-run market supply curve is the:

sum of all firms' MC curves above the minimum AVC.

Marginal revenue is defined as:

the change in total revenue divided by the change in quantity.

For a perfectly competitive firm, the short-run supply curve is:

the marginal cost curve above minimum AVC.

As more firms enter the market:

the short-run market supply curve shifts to the right.