ECON HW 4 (Chapter 8 Perfect Competition)
______________________ refers to the additional revenue gained from selling one more unit.
Marginal Revenue
The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
Price trader
If a firm's revenues do not cover its average variable costs, then that firm has reached its __________
Shutdown point
If the price that a firm charges is higher than its ________________ cost of production for that quantity produced, then the firm will earn profits.
average
In economics, the term "shutdown point" refers to the point where the
marginal cost curve crosses the average variable cost curve
If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased,
marginal cost is below average variable cost.
Under perfect competition, any profit-maximizing producer faces a market price equal to its
marginal costs
In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ .
marginal revenue; marginal cost
Idaho farmers can sell as large a quantity of their potato crop as they wish,
provided each is willing to accept the prevailing market price.
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 ______________________ .
quantity produced; both total revenue and total costs, measured in dollars.
Economic profit can be derived from calculating total revenues minus all of the firm's costs, including its ________________________________
opportunity costs.
Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar 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.
Refer to the diagram above. In this instance, at the range of output represented at point b,
total costs exceed total revenues
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?
what quantity to produce
Given the data provided in the table below, what will the amount of profit be for production at quantity (Q) level 7?
-$10.00
Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals
$20.00
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 marginal revenue equal for production at quantity (Q) level 4?
$5.00
Why are some producers forced to sell their products at the prevailing market price?
high degree of similarity to competitor's products
For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________________ .
For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________________ .
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, __________________
could likely result in a notable loss of sales to competitors
A perfectly competitive industry is a
hypothetical extreme.
I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output
is dictated by the forces of demand and supply
Refer to the diagram above. In this instance, the marginal revenue curve
reflects each of the above