econ

refer to figure 23.1 for a perfectly competitive firm. this firm should shut down in the short run if the market price is below

$5

what is the total variable cost when output is 100 units in figure 21.2

20,000

Assuming labor is a variable input, an increase in labor productivity will result in

A downward shift in the MC curve

diminishing returns occur because

A firm increases the amount of a variable input without changing a fixed input.

profit per unit is maximized when the firm produces the output where

ATC is minimized

refer to figure 23.6 for a perfectly competitive firm. assuming that points A, B, C, D are all above AVC, this firm will maximize profits by producing the level of output that corresponds to point

C

Accounting costs and economic costs differ because

Economic costs include implicit costs and accounting costs do not.

for a competitive market in the long run,

Economic profits induce firms to enter until profits are normal.

As an In and Out Burger restaurant increases the number of employees for a specific restaurant,

Efficiency will suffer as the restaurant becomes too crowded with employees.

in long-run perfectly competitive equilibrium, marginal cost

Equals the minimum of the ATC.

refer to figure 23.2 for a perfectly competitive firm. given the current market price of $100, we expect to see

Firms enter the industry, driving down the market price.

The production function shows

How a firm's production changes as quantity of labor and other inputs changes.

the equilibrium price in a competitive market

Is the price at which the quantity of a good demanded in a given time period equals the quantity supplied.

a profit-maximizing producer seeks

Maximize total profit.

in a perfectly competitive market, when price is equal to the

Minimum average total cost, economic profit is zero.

When a computer firm is producing a level of output at which MC is greater than price, from society's standpoint the firm is producing too

Much because society is giving up more to produce additional computers than the computers are worth.

for a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one?

P = maximum ATC

in which of the the following cases would a firm enter a market?

P > long-run ATC.

refer to figure 23.1. if the market price equaled $10, in the short run this firm should

Produce with an economic loss.

The entry of firms into a market, ceteris paribus,

Reduces the economic profit of each firm already in the market.

If a firm finds that its marginal cost is greater than its price, it

Should reduce production

To determine the market supply, the quantities

Supplied at each price by each supplier are added together.

If catfish farmers expect catfish prices to fall in the future, then right now

The market supply curve for catfish will shift to the right

If the price of ricotta cheese, an ingredient in lasagna, increases, then

The market supply curve for lasagna will shift to the left.

refer to figure 23.2 for a perfectly competitive firm. If this firm produces the level of output corresponding to point C in the short run, it will earn

The maximum profit possible.

perfectly competitive firms cannot individually affect market price because

There are many firms, none of which has a significant share of total output.

in a competitive market where firms are earning economic losses, which of the following should be expected as the industry to long-run equilibrium, ceteris paribus

a higher price and fewer firms

if economic profits are earned una. competitive market, then over time

additional firms will enter the market

technological changes that increase products shift the

average total curve downward

the marginal physical product is the

change in total output of associated with one additional unit of input

refer to figure 23.2 for a perfectly competitive firm. given the current market price of $100, we expect to see

entry into this industry

refer to figure 23.6 for a perfectly competitive firm. given the current market price, we expect to see

firms exit from the industry, driving up the market price

in figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In the long run, at prices below p3 in Figure 23.2

firms will enter the market

marginal cost is the increase in total cost associated with one-unit

increase in production

investment decisions are made on the basis of the relationship of price to

long run average total cost

the competitive market model is important becauxe

many industries function much like the competitive model

the behavior expected in a competitive market includes

marginal cost pricing

a production function shows

maximum output of a good attainable from different combinations of factor inputs

in a perfectly competitive market, when price is equal to the l

minimum average total cost, economic profit is zero

in which of the following cases would a firm a market

p > long-run atc

To maximize profits, a competitive firm will seek to expand output until:

price equals marginal cost

Profit per unit is equal to

price minus average total cost

profit per unit is equal to

price minus average total cost

If a firm finds that its marginal cost is greater than its price, it

should reduce production

barbs soccer ball company produces 800 soccer balls per week... consumers do not receive the most desirable quantity of soccer balls from Bib's becuaze

the cost of producing the additional 200 soccer balls is greater than the amount that consumers are willing to pay for the additional soccer balls

refer to figure 23.4 for a perfectly competitive market and firm. which of the following is most likely to occur, ceteris paribus

the first will exit in the long run

the market supply curve in a perfectly competing market is usually

upward-slopping