Ch. 12 Mircoeconomics

Which of the following is not true for a firm in perfect competition? Profit equals total revenue minus total cost. Price equals average revenue. Average revenue is greater than marginal revenue. Marginal revenue equals the change in total revenue from selling one more unit.

Average revenue is greater than marginal revenue.

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen? The firm's profits will increase. The firm's revenue will increase. The firm will not sell any output. The firm will sell more output than its competitors.

The firm will not sell any output.

The demand curve for each seller's product in perfect competition is horizontal at the market price because each seller is too small to affect market price. the price is set by the government. all the sellers get together and set the price. all the demanders get together and set the price.

each seller is too small to affect market price.

Perfect competition is characterized by all of the following except heavy advertising by individual sellers. homogeneous products. sellers are price takers a horizontal demand curve for individual sellers.

heavy advertising by individual sellers.

The demand curve for an individual seller's product in perfect competition is the same as market demand. downward sloping. vertical. horizontal.

horizontal

If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should increase its output. reduce its output. keep output constant and enjoy the above normal profit lower the price.

increase its output

A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm's short-run profit or loss. loss of $6,000 profit of $6,000 profit of $30,000 There is insufficient information to answer the question.

loss of $6,000

For a perfectly competitive firm, at profit maximization market price exceeds marginal cost. total revenue is maximized. marginal revenue equals marginal cost. production must occur where average cost is minimized

marginal revenue equals marginal cost.