Chapter11

Computer memory chips are produced on​ wafers, each wafer having many separate chips that are separated and sold. The above table shows costs for a perfectly competitive producer of computer memory chips. This firm will produce as long as the market price of a wafer is above

$1,300

A perfectly competitive firm

sells a product that has perfect substitutes

In the short​ run, a perfectly competitive firm​ ________ earn an economic profit and​ ________ incur an economic loss.

might; might

If new firms enter a perfectly competitive​ industry, the market supply

increases

A market is classified as monopolistically competitive when

many firms produce a slightly differentiated products.

The above figure illustrates a perfectly competitive firm. If the market price is​ $40 a​ unit, to maximize its profit​ (or minimize its​ loss) the firm should

produce 40 units.

For a perfectly competitive​ firm, the market price of a good is

+ A given which the firm cannot change. +Equal to the firm's marginal revenue.

If it does not shut​ down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

always to maximize its profit.

When a firm adopts new​ technology, generally its

cost curves shift downward.

​Jerry's Jellybean Factory produces​ 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market. The marginal cost is​ $3 per​ pound, the average variable cost is​ $2 per​ pound, and the beans sell for​ $4 per pound. Jerry

could increase his profit by producing more beans.

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

decrease.

A perfectly competitive firm will maximize profit when the quantity produced is such that the

​firm's marginal revenue is equal to its marginal cost.

In a perfectly competitive​ market, one​ farmer's barley is

a perfect substitute for another​ farmer's barley.

If the wheat industry is perfectly competitive with a market price of​ $4 per bushel and Farmer Brown charged​ $5 per​ bushel, how many bushels would Farmer Brown​ sell?

none

The above figure shows a perfectly competitive firm. If the market price is​ $20 per​ unit, the firm

will stay open to produce and will make zero economic profit.