Econ Exam part 2
If a purely competitive firms shuts down in the short run:
it will realize a loss equal to its total fixed costs
In the short run the individual competitive firm's supply curve is that segment of the:
marginal cost curve lying above the average variable cost curve
A competitive firm in the short tun can determine the profit-maximizing output by equating:
marginal revenue and marginal cost
Agriculture most closely approximates what kind of competition?
pure competition
The lowest point on a purely competitive firm's short run supply curve corresponds to:
the minimum point on its AVC curve
The MR = MC rule applies
to firms in all types of industries
Firms seek to maximize:
total profit
A firm reaches a break-even point (normal profit position) where:
total revenue and total cost are equal
A purely competitive firm's short run supply curve is
up-sloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve
A purely competitive producer will not
advertise its product
A perfectly elastic demand curve implies that the firm:
can sell as much output as it chooses at the existing price
Suppose you find that the price of your product is less than minimum AVC. You should:
close down because, by producing, your losses will exceed your total fixed cost s
Price is constant of given to the individual firm selling in a purely competitive market because:
each seller supplies a negligible fraction of total supply
What is not a characteristic of pure competition?
price strategies by firms