perfect competition

Use the table to answer the following question. Assuming the market is perfectly competitive, what is the marginal revenue between 4 and 6 pounds of kale?

$2

Suppose Carl's Candies sells 100 boxes of candy for $5 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a profit per unit of:

$2.50.

Suppose Carl's Candies sells 100 boxes of candy for $5 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a total profit of:

$250

Use the table to answer the question. If the market for apples is perfectly competitive, what market price would result in a normal (zero) profit?

$8.00

If the market above is perfectly competitive and the MR = $2, the profit/loss amount at the profit-maximizing quantity is

- 120

Which of the following markets would most closely resemble a perfectly competitive market?

- chlorine - wheat - cucumbers

How many tomatoes will the farmer produce in the market above to maximize profits?

100 pounds

A firm sustains a loss if:

TR < TC.

Which of the following markets would most closely resemble a perfectly competitive market?

Tomatoes

find the new market supply by ______ the short run supply curves for all the firms in the market

adding

in a ________ - cost industry the long-run supply curve is a horizontal line originating at the market _______ that generates normal profits for the firms in the industry.

constant price

In ______ -cost industries, the cost of production ________ with expanded output and the long-run market supply curve slopes downward.

decreasing drops

When consumers are relatively sensitive to changes in price, ______ is considered elastic

demand

the _____, the average revenue, and the marginal revenue curves for a perfectly competitive firm are the same horizontal line at the market price.

demand

total revenue minus the _____ and ______ costs of production is economic profit.

explicit implicit

The marginal cost is the:

extra or additional cost associated with the production of an additional unit of output.

In perfect competition,:

firms cannot influence the market price with production decisions.

In a perfectly competitive market, we assume the product is ______ in the minds of consumers

homogeneous

as the market price ______ ,all else held constant, a profit-maximizing firm can afford to expand its production.

increases in perfect competition, MR=P, as price rises or falls output can change in the following way.If MR > MC, output increasesIf MR < MC, output falls

in _________ -cost industries, the cost of production ________ with expanded output and the long-run market supply curve slopes upward.

increasing increases

At the shutdown point, the price is _____ the average variable cost.

less than

If the market price is below the average variable cost, the firm is:

losing money in the short run and should shut down.

When the total revenue earned by a firm is less than the total cost of production the firm faces a ______

loss

in the presence of ______ firms exit unitl the market reaches the point at which firms are generating a _____ profit; then exit stops and the market settles down into its ______ run equilibrium

losses normal long

profit ________ implies that perfectly competitive firms should expand production up to the point where marginal revenue equals marginal cost.

maximization

Firms that take or accept the market price and have no ability to influence that price are _______ takers

price

In the short run, as the price rises,:

quantity supplied rises.

total _____ equals price times quantity

revenue

All firms maximize profits by producing the quantity of output at which the marginal _____ is equal to the marginal ________

revenue cost

profit equals total _____ minus total ________

revenue cost

the more _____ there are for a product, the more elastic the demand for that product will be.

substitutes

The long-run relationship between the price and the quantity supplied is given by the long-run _______ curve

supply

In a perfectly competitive market, the price the firm should charge is the market price because the firm is a price ________

taker

A constant-cost industry is an industry in which:

the firms' cost structures do not vary with changes in production.

The firm's short-run supply curve is a(n) __-sloping curve that begins at __ average variable cost.

upward; minimum

If labor costs increase, a firm's marginal cost curve will shift ___

upwards

The short-run supply curve starts at the minimum average _____ cost

variable

If a firm is earning an economic profit,:

P > ATC.

Identify the characteristics of a perfectly competitive market. (Select all that apply.)

- Easy entry and exit for firms - A large number of buyers and sellers - A standardized product - Producers who are price takers

Suppose Carl's Candies sells 100 boxes of candy for $4 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a profit per unit of:

1.50

If the market price for tomatoes is $6 per pound, and the spinach market is perfectly competitive, what is the profit-maximizing quantity?

120lbs

Suppose Carl's Candies sells 100 boxes of candy for $4 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a total profit of:

150

In a constant-cost, perfectly competitive industry, what is the shape of the long-run supply curve?

Horizontal

In a constant-cost, perfectly competitive industry, what happens to price in the short-run if the market demand increases?

The price increases.

The perfectly competitive model is the most efficient type of market and is characterized by both productive and ______ effiency

allocative

In a perfectly competitive market, we assume the product is identical in the minds of ________

consumers

A perfectly competitive market involves firms that are price takers. This guarantees:

consumers receive the lowest prices.

A perfectly competitive market involves firms that produce identical products. This guarantees:

consumers receive the lowest prices.

Because perfectly competitive firms are price takers, the marginal revenue is equal to the market

cost

In the long run,:

firms earn a normal profit.

A perfectly competitive firm will incur its total _____ cost of production when it shuts down temporarily in the short run.

fixed

The extra or additional cost associated with the production of an additional unit of output is the _____ cost

marginal

because the _____ revenue faced by the firm is equal to the price, average revenue is also constant and equal to price

marginal

in the short run, the supply curve for a firm is the ______ cost curve above or equal to the average ______ cost curve

marginal variable

A perfectly competitive firm should produce output until the point where:

marginal revenue equals marginal cost.

The market condition in which firms do not face incentives to enter or exit the market and firms earn a(n) ________ profit is known as long run equilibrium is k

normal

________ profit is also known as zero economic profit.

normal

a market structure characterized by the interaction of large numbers of buyers and sellers in which the sellers produce a standardized or homogeneous product.

perfect competition

A constant-cost industry is an industry in which the firms' cost structures do not vary with changes in _____

production

_________ efficiency is using the fewest resources possible to produce a good or a service.

productive

In the long run, perfectly competitive firms achieve ______ efficiency by producing at the lowest cost and _____ efficiency by producing what consumers want.

productive allocative

because the marginal _____ equals the market _______ for perfectly competitive firms, they should produce output until the market price equals the marginal cost.

revenue price Profit maximizing, perfectly competitive firms produce up to a point where MR = MC. Since, in perfect competition, MR = P, the firm produces at a point where the P = MC.

The decision to shut down temporarily is a _____ -run decision, while the decision to exit an industry can be made only in the _____ run

short long

Changes in the variable costs of resources will affect:

the marginal costs faced by firms.

The total revenue divided by the number of units of a product sold is the _____ revenue

average

Use the graph of a perfectly competitive market above to answer the question. If the market for office paper is perfectly competitive, the price for a typical perfectly competitive firm is $

20

Refer to the two graphs above the answer the following question. Assume the market for office paper is perfectly competitive. What is the profit maximizing quantity and profit for the office paper firm?

40 cases, Profit = −$600

In a perfectly competitive market, assume the market price is $10 per unit, and the profit-maximizing quantity is 45 units. If the ATC at 45 units is $8, the profit/loss amount at the profit-maximizing quantity is $

90

Use the table to answer the question. If the MR = $5.00, what is the profit-maximizing quantity and profit amount?

90 pounds, Profit = $81

The long-run supply curve represents:

the long-run relationship between the price and the quantity supplied.

The price of a good times the number of units sold gives us:

total revenue.

In a perfectly competitive market, assume the market price is $5 per unit and the profit-maximizing quantity is 70 units. If the ATC at 70 units is $8, what is the profit/loss amount at the profit-maximizing quantity?

−$210

By responding to changes in market price, competitive firms produce more of the products we value most and fewer of the products we value least thereby achieving:

allocative efficiency

The amount of revenue produced per unit of an output sold is the ______ revenue

average

In a perfectly competitive market, a single firm is a price taker and therefore can only charge the ______ price.

market

If an economy is going to produce the goods and services most wanted by society, competitive firms:

produce more of the products we value most and fewer of the products we value least.

_______ profit creates an incentive for other perfectly competitive firms to enter the market

economic

Total revenue minus the implicit and explicit costs of production is ______ profit

economic

The demand for a perfectly competitive firm's product is a horizontal line originating at the market

price

When output is produced so that the marginal benefit equals the marginal cost, there is _______ efficiency

allocative

When a firm shuts down in the short run, it must still pay the _____ costs.

fixed

zero _____ profit or normal profit is the revenue needed for a company to break even and meet operating costs without a loss.

economic

When it shuts down temporarily in the short run, a perfectly competitive firm

still incurs its total fixed costs.

The level of profit that occurs when the total revenue is _______ to the total cost is known as normal profit

equal

Extra or additional revenue associated with the production of an additional unit of output is the:

marginal revenue.