Chapter 8 - Perfect Competition - ECON
The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead
are two stark realities any business firm must recognize.
If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses.
average cost
If the average product for six workers is fifteen and the marginalproduct of the seventh worker is eighteen, then
average product is rising.
In economics, labor demand is synonymous with
derived demand.
Which of the following can be thought of as an adjustment for the risks involved with respect to the cost of a firm acquiring financial capital?
imposition of hurdle rates of interest
A manufacturer would likely make an ___________ in a market following the long-run process of beginning and expanding production in response to ________________ .
entry; a sustained pattern of profits
the long-run process of firms reducing production and shutting down in response to industry losses
exit
where all firms earn zero economic profits producing the output level where P = MR = MC and P = AC
long-run equilibrium
In economics, the term "shutdown point" refers to the point where the
marginal cost curve crosses the average variable cost curve
each firm faces many competitors that sell identical products
perfect competition
If a perfectly competitive firm is a price taker, then
pressure from competing firms will force acceptance of the prevailing market price.
I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company
must accept market price for its physical capital inputs.
The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
price taker
a firm in a perfectly competitive market that must take the prevailing market price as given
price taker
In Sam's greenhouse operation, labor is the only short term variable input. After completing a cost analysis, if the marginal product of labor is the same for each unit of labor, this will imply that
the average product of labor is always equal to the marginal product of labor.
In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _____________________ .
short run; losses are smallest
level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of AVC; if the price is below this point, the firm should shut down immediately.
shutdown point
Even when competitive firms are unable to calculate marginal revenue product directly, _________________________________________ will push wage rates toward the marginal revenue product of labor.
the pressures of competition in the labor market
Refer to the diagram below. Based on the information illustrated in this graph, which of the following is an accurate statement?
MC is initially downward sloping in the region of increasing MR at low output levels
Refer to the diagram below. In this instance, at the range of output represented at point c,
profits will be maximized.
Given the data provided in the table below, what will the marginal cost equal for production at quantity (Q) level 4?
$4.00
Given the data provided in the table below, what will the fixed costs equal for production at quantity (Q) level 4?
$9.00
the long-run process of firms entering an industry in response to industry profits
Entry
Refer to the diagram below. At the point marked m,
TR is exactly equal to TC, so profits equal zero.
In a perfectly competitive market setting, which of the following would be a true statement?
Wage rates trend toward marginal revenue product levels.
Economic profit can be derived from calculating total revenues minus all of the firm's costs,
including its opportunity costs.
A perfectly competitive industry is a ____________________
hypothetical extreme.
the additional revenue gained from selling one more unit
marginal revenue
Refer to the table below. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its
marginal revenue is constant.
the conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold
market structure
Refer to the diagram below. In this instance, the marginal revenue curve
reflects each of the above
Refer to the diagram above. In this instance, point e shown on the graph indicates
the profit-maximizing point where MR = MC