Quiz 4 Review

Each firm in a perfectly competitive industry:

Produces a good that is identical to that of the other firms.

For a perfectly competitive rancher in Wyoming, if the price does not change, an economic 3) profit could turn into an economic loss if the

average total cost curve shifts upward

A perfectly competitive firm maximizes its profit by producing at the point where

marginal revenue is equal to marginal cost.

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a 4) good and maximizes profits when the price of the good is $10. If there is a permanent increase in demand, in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000.

more than; more than

In the long run, existing firms exit a perfectly competitive market:

only if they incur an economic loss.