Econ ch 6
Assume that the market for chocolates is perfectly competitive. Which of the following statements would be true in this case?
Jill starts to produce chocolates today, but the addition of her supply into the market does not decrease the market price.
In a perfectly competitive market, all of the following statements are true except:
Marginal revenue is equal to price times quantity.
Suppose one firm accounts for 55 percent of the global market share for a product, while 147 other firms account for the remaining 45 percent of the market. With such a large number of buyers and sellers, is this market likely to be competitive?
No, even though there are many firms in the market, there is one firm large enough to influence the market price.
Which of the following equations measures price elasticity of supply?
Percentage change in quantity supplied/ Percentage in price
In terms of economic profits, early market entrants earn ___ economic profits and the last entrant earns ___economic profits.
Positive Zero
If the graph on the right represents the market supply and demand curves for pizza, what do we know about the demand curve for an individual pizza shop if the pizza market is in perfect competition?
The shop's demand curve is horizontal at exactly $8.
All of the following could cause an increase in producer surplus except:
an upward shift in the marginal cost curve
The long-run supply curve in a perfectly competitive market is _____
horizontal
To construct the supply curve in a market with many firms with different cost structures, the ___________.
individual supply curves for each firm are added together.
The more inelastic a supply curve is the ___ responsive the quantity supplied is to changes in the price level.
less
Consider a market with many firms that have different cost structures. Unless shutdown or exit is optimal, every firm expands production until ___________.
marginal revenue, marginal cost, and price are all equal (MR = MC = P).
The more elastic a supply curve is the ____ responsive the quantity supplied is to changes in the price level.
more
Suppose Louis Corporation could increase its profits considerably if it decided to shift from the clothing industry to the IT industry. In this case, the economic profits of Louis Corporation in the clothing industry are ____
negative
A perfectly competitive firm will choose to shut down when the _____ ______ intersects the marginal cost curve below the ______ .
price (marginal revenue) average variable cost curve
The amount of money the firm brings in from the sale of its outputs is called _____, while the change in total revenue associated with producing one more unit of output is called ______
revenue marginal revenue
The long-run supply curve in a perfectly competitive market states that _____.
the long-run quantity can vary while the equilibrium price returns to the price at the minimum of the average total cost
In the long run, the supply curve for a perfectly competitive firm is represented by __________.
the portion of the marginal cost curve above average total cost.
Therefore, the short-run supply curve for a perfectly competitive firm is represented by __________.
the portion of the marginal cost curve above average variable cost.
Martha runs a business that makes designer jeans. Each of the seamstresses she employs uses one of the sewing machines on the factory floor. In the short run, the seamstresses are a ____ factor of production and the sewing machines are a ____ factor of production. The output of each seamstress is considered the _______ product.
variable fixed marginal
In contrast, suppose Louis Corporation wouldn't be able to increase its profits if it decided to shift from the clothing industry to the IT industry. In this case, the economic profits of Louis Corporation in the clothing industry are ____
zero
The equilibrium price is the ___________.
long-run average total cost of the last entrant into the market.
