chapter 8 microecon test
what quantity to produce
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
short run, losses are small
In the ___, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where
are two stark realities any business firm must recognize
The fact that a consumer is not required to buy the goods that a given firm produces, but may choose to buy from other firms instead ___
price taker
The term _____ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product
marginal revenue
____ refers to the additional revenue gained from selling one more unit
hypothetical extreme
a perfectly competitive industry is a ___
accounting profit, excluding opportunity cost
an ___ is calculated by subtracting the firm's costs from its total revenue, ___
including its opportunity costs
economic profit can be derived from calculating total revenues minus all of the firm's costs, ___
perfect competition
firms operating in a market situation that creates ___, sell their product in a market with other firms who produce identical or extremely similar products.
if they set their own price in the short run, but in the long run, the market sets the price.
idaho farmers can sell as large a quantity of their potato crop as they wish, __
shutdown point
if a firm's do not cover its average costs, then that firm has reached its ___
quantity produced; both total revenue and total costs, measured in dollars
if a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the ___ and the vertical axis will represent ___.
pressure from competing firms will force acceptance of the prevailing market price
if a perfectly competitive firm is a price taker, then ___
price of competing products
if the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?
long run, reducing production or shutting down
in the ___, the perfectly competitive firm will react to losses by ___
long run, increasing its production
in the ___, the perfectly competitive firm will react to profits by ______
short run, the quantity of output where profits are highest
in the ___, the perfectly competitive firm will seek out ___
could likely result in a notable loss of sales to competitors
it is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00 ___
TR is exactly equal to TC, so profits equal zero.
refer to the diagram above. At point marked e,
total costs exceed total revenues
refer to the diagram above. in this instance, at the range of output represented at point b
profits will be maximized
refer to the diagram above. in this instance, at the range of output represented at point c.
marginal costs
under perfect competition, any profit-maximizing producer faces a market price equal to its ___
high degree of similarity to competitor's products
why are some producers forced to sell their products at the prevailing market price?
to produce the highest profitable quantity of output at the lowest possible marginal cost
why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?