chapter 10 quiz

Competitive firms maximize:

total profits by producing where price equals marginal cost market share by producing where price equals average total cost

Individual firms in purely competitive markets:

are "price takers"

Use the following diagram to answer the next question. Which one of the following price-quantity combinations is not on this competitive firm's short-run supply curve?

P4, 30

The market for which of the following most closely approximates pure competition?

feed corn

A purely competitive firm has set its price at the market price of $210. The firm is operating on the upsloping section of its marginal cost curve and t its current output level, its marginal cost is $225. Assuming the firm wishes to maximize profit, it should:

leave price unchanged and cut production

Use the following diagram to answer the next question. At which of the following prices will the firm produce a positive amount but incur a loss?

p3

A competitive firm is currently producing and selling 2000 units per month at the market price of $5.60. Its total cost is $12,000, of which its fixed costs are $1,000, and its marginal cost is $5. This firm:

should increase production

For all values above minimum average variable cost, a competitive firm's:

supply curve is coincident with its marginal cost curve

Compared to the downsloping demand curve for the output of a competitive industry, a single firm operating in that industry faces:

a perfectly elastic demand curve

Answer the next question on the basis of the following cost data for a competitive firm. Refer to the above data. If the market price is $35 and the firm produces its optimal amount, it will:

incur a $55 loss