Chapter 5.1

Perfectly competitive firms produce:

All of them above

Which of the following is characteristic of perfectly competitive markets?

All of them above

A perfectly competitive firm faces a demand curve that is __, and the industry demand curve is __.

Horizontal / downward sloping

A perfectly competitive firm sells 500 units of a product at $300 per unit. What's the firm's marginal cost and marginal revenue per unit?

MC=$300, MR=$300

The perfectly competitive firm breaks even when:

Price equals the minimum of the average total cost

In term of percent competition, which of the following is true

Profit maximization occurs at the level of output where price equals marginal cost, price always equals average revenue, and a profit maximization occurs at the level where marginal revenue equals marginal cost

A perfectly competitive firm is a price taker. This means:

The firm faces a perfectly elastic demand, and the price of the output is qual to the marginal revenue at all levels of output

In the short run, a perfectly competitive firm will shut down whenever:

The market price is below average variable costs at all possible levels of output

If the market is an increasing-cost. industry, the long run supply curve is __. If demand increases, the price of the product will __.

Upward-sloping; increase

A perfectly competitive firm must decide:

Which level of output to produce