ECON 201 Chapter 13 HW

Refer to the graph shown. What distance represents average profits?

AB

Refer to the graph shown. A perfectly competitive firm would never operate if the price dropped to which segment of the marginal cost curve?

AC

Refer to the graph shown, which depicts a perfectly competitive firm. When maximizing profit, the firm represented will earn per-unit profit roughly equal to:

$2.00.

Refer to the table shown. The maximum profit that the perfectly competitive firm represented by the above data could earn is:

$45

Refer to the graph shown. The marginal cost of producing the 60th unit is:

$6.50

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

-$38.

An assumption of a competitive market is that both buyers and sellers are price takers. When we go to the mall to shop for clothing or to the grocery to buy food, what do we usually observe?

Buyers are often price takers, but sellers are usually price makers.

eBay.com is a vast auction site that is similar to a competitive market in some ways but differs from it in others. Which of the following describes how eBay resembles a competitive market?

It is easy to enter and easy to leave eBay.

Refer to the graph shown. If the market price is P2, the firm will produce:

Q3 and break even.

Refer to the graph shown. Suppose the market price is $3. At this price, a perfectly competitive firm should:

Shut down immediately

In a perfectly competitive decreasing-cost industry, a decrease in market demand in the long run causes:

a decrease in quantity, an increase in price, and no change in profit.

A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm's goal is maximize profit, it should:

continue producing 500 widgets.

Refer to the graph shown. If market price decreases from $7.00 per unit to $6.00 per unit, a profit-maximizing perfectly competitive firm will:

decrease output from 850 to 750.

Suppose the dry cleaning industry is initially in long-run equilibrium but then experiences a sharp increase in the price of its inputs. Assuming that the industry is perfectly competitive, the increase in costs should:

decrease the number of firms in the industry in the long run and raise the market price.

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

firm shown in the graph will produce q0, but all the firms in the market will produce a total of Q0.

Which graph depicts a perfectly competitive firm in long-run equilibrium?

graph II

If market demand increases in a perfectly competitive increasing-cost industry:

new firms will enter the industry, factor prices will rise, and the price at which each firm earns zero economic profit will increase.

Suppose that the firms in the perfectly competitive oat industry currently are receiving a price of $2 per bushel for their product. The minimum possible average total cost of producing oats in the long run is $1 per bushel. It follows that:

new firms will enter the oat industry.

In a perfectly competitive market, the demand curve faced by an individual firm is:

perfectly elastic.

A perfectly competitive firm in the long run earns:

positive normal profits but zero economic profits

Barriers to entry:

restrict the number of firms in an industry.

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:

some firms will exit this market and the price will return to P0.

Spam (junk e-mail) is a major annoyance for many people who use the Internet. However, spammers sometimes have to send thousands of messages to get just one response that pays money. Given this information:

spamming can be profitable even with a very low number of buyers because the marginal cost of sending spam is virtually zero.

Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the product is $3:

the firm may continue to operate in the short run but will exit the industry in the long run.

The supply curve of a perfectly competitive firm is:

the marginal cost curve only if price exceeds average variable cost.

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0:

this market is in long-run equilibrium because the firm is earning zero economic profit.