Chapter 15 Micro

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23 the firms average total cost is $20 what is the firms total cost?

$1,000

A perfectly competitive firm is producing 50 units of an output and selling at the market price of $23 the firms average total cost is $20 what is the firms economic profit

$150

In the short run, a perfectly competitive firm

Can possibly earn an economic profit or possibly incur an economic loss

If a perfectly competitive seller is maximizing profit and is earning zero economic profit which of the following will this seller do

continue current output earning normal profit

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

decrease

If a perfectly competitive firm raised the price of its product

the quantity of output it sells decreases to zero

Normal profit is

the return to entreprenuership

The market supply in the short run for the perfectly competitive industry is

the sum of the supply schedules of all firms

One requirement for an industry to be perfectly competitive is that

there is no restrictions to entry into or exit from the market

under which of the following conditions will a profit maximizing perfectly competitive firm shut down in the short run

when the price is less than its minimum average variable cost

In the long run perfectly competitive firm earns

zero economic profit

Perfect competition is characterized by all of the following except

considerable advertising by individual firms

Which one of the following is the best example of a perfectly competitive market

Farming

A perfectly competitive firms demand curve is horizontal because

I. the firm is so small , relative to the market, that it cannot affect the market price II. there are many perfect substitutions for its product III. the firm cannot sell any output at a price higher than the market price

For a perfectly competitive firm, profit is maximized at the output level where

I. total revenue exceeds total cost by the largest amount II. Marginal revenue equals marginal cost III. price equals marginal cost

In which market structures do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit.

Only perfect competition

A perfectly competitive firm

Sells a product that has perfect substitutes

When new firms enter the perfectly competitive Miami Bagel market the market

Supply curve shifts rightward

A perfectly competitive market arises when

The market demand is very large relative to the output of one seller

In a perfectly competitive market one farmers barley is

a perfect substitute for another farmers barley

A firm that is a price taker faces

a perfectly elastic demand curve

In the long run perfectly competitive firms produce at the output level that has the minimum

average total cost

If the technology associated with producing fiber optic cable continues to advance over time the cost of producing fiber optic cable will

decrease, firms that use the new technology will earn an economic profit and in the long run new firms will enter the market

For the perfectly competitive broccoli producers in California the market demand curve for broccoli is

downward sloping

If Henry a perfectly competitive lime grower in South California can sell his limes at a price greater than his average total cost, henry will

earn an economic profit

In a perfectly competitive industry when a firm is producing so that its total revenue equals its total cost the firm is

earning zero economic profit, that is, earning normal profit

Henry a perfectly competitive lime grower in Southern California notices that the market price of lime is greater than his marginal cost what should henry do?

expand his output to increase profit

For a perfectly competitive firm the price of its good is equal to the firms marginal revenue because

individual perfectly competitive firms cannot influence the market price by changing their output

In perfect competition , marginal revue

is equal to market price

a perfectly competitive firms short run supply curve is

its marginal cost curve above the AVC curve

In the long run , perfectly competitive firms will exit the market if price is

less than the average cost

a firm in perfect competition is a price taker because

many other firms produce identical products

A firms over riding objective is to

maximize economic profit

When firms in a perfectly competitive market are earning an economic profit, in the long run

new firms will enter the market

the four market types are

perfect competition, monopoly, monopolistic competition, and oiligopoly

a perfectly competitive firm can

sell all of its output at the prevailing market price

marginal revenue is

the change in total revenue from a one unit increase in quantity sold