BECO Test 2 CH.14

its fixed costs but not its variable costs

A firm that shuts down temporarily has to pay

$1,600.

Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is

free entry and exit by firms.

Competitive markets are characterized by

change in profit

For a firm, marginal revenue minus marginal cost is equal to

average revenue and the price for all levels of output

For an individual firm operating in a competitive market, marginal revenue equals

Stella's Fashion Jewelry total revenue must be proportional to its quantity of output.

If Stella's Fashion Jewelry sells its product in a competitive market, then

a one-unit decrease in output will increase the firm's profit.

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

its average total cost is less than $10.

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

double.

If a firm in a competitive market doubles its number of units sold, total revenue for the firm will

profits will rise.

If there is an increase in market demand in a perfectly competitive market, then in the short run

give riding lessons to fewer than 20 children per month.

Robin owns a horse stable and riding academy and gives riding lessons for children at "pony camp." His business operates in a competitive industry. Robin gives riding lessons to 20 children per month. His monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should

$30 and 100 units

Suppose a firm in a competitive market earned $3,000 in total revenue and had a marginal revenue of $30 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?

remain unchanged.

Suppose a firm in a competitive market increases its output by 20 percent. As a result, the price of its output is likely to

profit is maximized.

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

typically be more elastic than the short-run supply curve

The long-run market supply curve in a competitive market will

new firms will enter the market.

When profit-maximizing firms in competitive markets are earning profits,

Entry is limited.

Which of the following is not a characteristic of a competitive market?

Shut down if TR < VC

Which of the following represents the firm's short-run condition for shutting down?

For all firms, average revenue equals the price of the good.

Which of the following statements regarding a competitive firm is correct?

You should go home and read a book.

You purchase a $30, nonrefundable ticket to a play at a local theater. Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show. Alternatively you could leave the theater and go home and watch TV or read a book. You place an $8 value on watching TV and a $12 value on reading a book.