Micro ch. 12 hw & study module

Resources are allocated efficiently when​ _______.

marginal social benefit equals marginal social​ cost, and the economy is producing the goods and services that people value most highly

In perfect​ competition

price always equals marginal revenue. ?? & a​ firm's marginal revenue curve also the demand curve for the​ firm's output?

In a perfectly competitive​ market, the market demand is​ _______ and the demand faced by the individual firm is​ _______.

shown by a​ downward-sloping curve; perfectly elastic and the firm takes the market price as given

The market price is

the price at which the quantity demanded equals the quantity supplied

When some firms exit a market in which firms incur economic​ losses, the market supply curve shifts​ ______ and the market price​ ______.

​leftward; rises

Perfect competition is a market in which there are​ _____ firms, each selling​ _____ product; many​ buyers; _____ to the entry of new firms into the​ industry; no advantage to established​ firms; and buyers and sellers​ _____ about prices.

​many; identical; no​ barriers; are well informed

When new firms enter a perfectly competitive market in which firms are making an economic​ profit, the market supply curve shifts​ _______ and the market price​ _______.

​rightward; falls

The shutdown point is the point at which price equals minimum average​ _____ cost and the quantity produced is that at which average​ _____ cost is at its​ _____.

​variable; variable; minimum Shutdown point is the point at which price equals minimum average variable cost and the quantity produced is that at which average variable cost is at its minimum.

The​ firm's supply curve is the same as

its marginal cost curve at prices above minimum average variable cost

In a market undergoing technological​ change, firms that adopt the new technology​ _______. Firms that stick with the old technology​ _______.

make an economic profit and there is entry by​ new-technology firms; either exit the market or switch to the new technology

The market for pizza is perfectly competitive and has​ 1,000 firms. Each firm is identical. Describe each firm in​ long-run equilibrium. In​ long-run equilibrium, each firm is​ _______.

making zero economic profit; In​ long-run equilibrium, there is no incentive for firms to either enter or exit the market. Firms enter the market when existing firms are making an economic profit. Firms exit the market when existing firms are incurring an economic loss. In​ long-run equilibrium firms are making zero economic profit.

A​ firm's supply curve is its​ ______.

marginal cost curve above minimum average variable cost A firm is willing to produce if it can cover its total fixed​ cost, so the supply curve extends lower than minimum average total cost. But you are correct that the​ firm's supply curve does run along part of the length of the marginal cost curve because the firm chooses the level of output such that marginal cost equals marginal revenue.

Each​ firm's output​ _______.

Each firm produces the quantity at which marginal cost equals marginal revenue. In a perfectly competitive​ market, marginal revenue equals price. So when the market price​ falls, each firm moves down along its marginal cost curve and each​ firm's output decreases.

In a competitive​ market, the market demand curve measures​ ______. In a competitive​ market, the market supply curve measures​ ______.

__marginal social benefit if the people who consume a good or service are the only ones who benefit from​ it; marginal social cost if the firms that produce a good or service bear all the costs of producing it -If the people who consume a good or service are the only ones who benefit from​ it, then the market demand curve measures the benefit to the entire society and is the marginal social benefit curve. If the firms that produce a good or service bear all the costs of producing​ it, then the market supply curve measures the marginal cost to the entire society and the market supply curve is the marginal social cost curve.

Clara's marginal revenue curve​ _______. #8

is also her​ firm's demand curve because the price remains the same regardless of how many purses she sells

A firm in perfect competition is a price taker because​ _______.

it produces a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms