chapter 23
The demand curve for a perfectly competitive firm is
horizontal.
A perfectly elastic long-run supply curve
indicates that input prices do not change when firms enter or exit the industry.
Which of the following is not one of the assumptions of a perfectly competitive market?
Better information for producers than consumers.
In the long run, all firms in a perfectly competitive industry
Break even
In a perfectly competitive market, if P = ATC in the long run, the firm will
None of the above.
In long-run equilibrium which of the following is true for the firms in a perfectly competitive industry?
P = MR = MC = ATC.
Suppose that a perfectly competitive firm faces a market price of $55 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1 comma 5001,500 units. If the firm produces 1 comma 5001,500 units, its average variable costs equal $5.505.50 per unit, and its average fixed costs equal $0.500.50 per unit.
What is the firm's profit-maximizing (or loss-minimizing) output level? 1,500 What is the amount of its economic profits (or losses) at this output level? $ negative −1500.
A perfectly competitive firm is charging $5 and selling 1650 units a month. The firm raisesraises its price by a nickel aboveabove the market price. Its profit
Will go to zero
If a firm is making zero economic profits it should
continue operating.
The decision making process for the perfectly competitive firm boils down to
deciding how much to produce.
When the perfect competitor earns less than normal profits in the short run, the firm will
decrease production.
The demand curve for the perfectly competitive industry is
downward sloping.
When the perfect competitor earns less than normal profits in the long run, the firm will
exit the industry.
A perfectly competitive firm wants higher profits and has decided to raise the price of its product. As an economic consultant you would advise them to
not do this since they would lose all of their sales to competitors.
Perfect competition is efficient because
price equals marginal cost.
The lowest profit a firm should ever make in the short run is
the losses associated with the fixed costs of the firm.
The supply curve of the perfectly competitive firm in the short run is equal to
the marginal cost curve above minimum AVC.
If a perfectly competitive firm sells the product for a profit-maximizing price of $4.76 and has average total cost per unit of $5.16, in the short run
this firm should shut down if $4.76 is less than minimum AVC. B. this firm must hope the market price rises soon or exit the industry. C. this firm is losing money.
If markets are perfectly competitive then the production of goods
will use the least costly combination of resources.
In long-run equilibrium, the perfectly competitive firm makes
zero economic profits.