chapter 8
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
if prices fall below average variable cost some firms in this industry will _ causing prices to _.
exit; increase
which of the following is true about firms exiting a perfectly competitive market?
exiting the market occurs in response to a sustained pattern of losses
in a perfectly competitive market in long-run equilibrium, a decrease in demand creates economic _ in the short run and _ in the long run.
losses; forced some firms to exit
in economics, the term "shutdown point" refers to the point where the
marginal cost curve crosses the average variable cost curve
a firms supply curve is equal to _ above the minimum point on the _ curve.
marginal cost; average variable cost
in a perfectly competitive market, a profit maximizing company will produce an output level where the market price equals to its
marginal costs
if a firm's revenues do not cover its average variable costs, then that firm has reached its _.
shutdown point
which of the following accurate explains why firms in a perfectly competitive markets are price takers?
the pressure of competition forces all firms to accept the prevailing equilibrium price in the market
in general, firms will maximize profits when the:
marginal revenue = marginal cost
in a perfectly competitive market when economic profit, that firms are experiencing, is greater than zero?
new firms may enter the industry and all of the above
in a perfectly competitive industry the market is in long-run equilibrium, when:
p = mr = mc = ac
if price equals marginal cost and average cost, then _.
the firm breaks even
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
a firm sells peanuts in a perfectly competitive market. upon increasing production output from 60 packages to 75 packages, the total revenue increased from $300 to $375. what was the marginal revenue of this increase in production?
$5
the market price for tennis balls is currently $2. at this price, a firm is willing and able to produce 80 tennis balls. however, at this level of production, the firm experiences an average total cost of $0.50 per tennis ball. what is the profit for this firm?
$120
given the data provided in the table below, what will the marginal cost equal for production at quantity (q) level 5?
$5
a fruit stand buys oranges for $0.50 a piece. they sell 45 oranges at $2.00 a piece. how much profit did the fruit stand make?
$67.50
in order for a firm producing and selling kitchen tables to be operating at allocative efficiency, when a price equals $800, marginal cost much equal _.
$800
if a firm's total revenue is equal to $1050 and it's total costs are equal to $2000, then what are it's profits (or losses)?
-950
in the case of Snack Corp, when the price they sell their product at is _ average cost of production, profits are _ due to _ average profit.
below; negative; negative
if a perfectly competitive firm is producing a quantity where p<mc, then profit:
can be increased by decreasing production.
which of the following is not a characteristic of a perfectly competitive market? select all that apply.
firms produce similar, but not identical products
when a firm shuts down,
it continues to pay fixed costs
______________________ refers to the additional revenue gained from selling one more unit.
marginal revenue
productive efficiency occurs when:
price equals the minimum of the long-run average cost curve
in a perfect competition, a firm's short-run profits are zero when:
price intersects marginal cost at a level equal to the average cost
During the summer, Alex runs a mowing service, and lawn mowing is a perfectly competitive industry. In the short run, Alex will shut down if:
the total revenues can't cover variable costs
