Econ final

A firm under PC produces at profit maximizing output level. this output level is acheived when ____ and the MC curve intersects the MR curve from ____

MR= MC; below

At profit maximizing level of output, a firm in the short run

can earn profits or incur or be in a situation of no profit no loss

Bundling products makes sense for the seller when

consumers have heterogeneous demands & firms cannot price discriminate.

You are a consultant to a Pet Shop that operates in a perfectly competitive environment. The firm is currently producing at a point where market price equals its marginal cost. The Pet Shop's total revenue exceeds its total variable cost but is less than its total cost. you should advise Pet Shop to

continue in bussiness

At its present level of output of 100 units, a perfectly competitive firm discovers that (i) its total fixed costs are $200 and (ii) its marginal cost is $7 and equal to average total cost. At an output level of 50 units, marginal cost is $4 and equal to average variable cost. The price of the commodity being produced is $6. If the firm wishes to maximize total profits, what should the firm do?

decrease output

Suppose world demand for a product produced by firms under perfectly competitive environment decreases. As a result, the world price of this product will ___________ and existing firms will start _____________.

decrease: incurring losses

for many market structure, price

equals average revenue

for a firm under perfect competition, price

equals marginal revenue

According to Abba Lerner's measure of monopoly power, monopoly power is ____________ when own price elasticity of demand is ________ .

higher; lower

The demand curve facing a pefectly competitive firm is

is the same as average curve and its marginal revenue curve

Dumping occurs when the monopolist charges a price _________ marginal cost of production.

less than

At its present level of output of 100 units, a perfectly competitive firm discovers that (i) its total fixed costs are $200 and (ii) its marginal cost is $7 and equal to average total cost. At an output level of 50 units, marginal cost is $4 and equal to average variable cost. The price of the commodity being produced is $6. At present level of output, the firm experiences

losses less than its total fixed cost

at output of 9 units, P > ATC, then the firm is

making profits

As compared to a monopoly, a firm under perfect competition will produce ______________ output and charge ___________ price

more; less

for a monopolist, if total revenue increases as output decreases, then marginal revenue is

negative

The firms in the oat industry are currently receiving a price of $2 per bushel for their product. The minimum of long - run average cost is $1 per bushel. It follows that

new firms will enter the oat industry

the slope of the total revenue curve measures

only marginal revenue

Suppose there are 50 firms in a perfectly competitive market and each maximizes profit at 50 units of output when the market price is $15.00 per unit. One of the points on the market supply curve must be at:

price=$15; quanity supplied= 2,500

Suppose world demand for a product produced by firms under perfectly competitive environment decreases. As a result, some firms ________ business and the world supply curve will shift to the _______________ .

quit; left

a perfectly competitive firms marginal revenue is exceeded by its marginal cost at its current level of output. the firm will

reduce its output

total profits are at maxium, where

the difference b/t total revenue and total cost is at a maxium

A firm under monopoly is likely to produce less and set a higher price than under perfect competition because

the firm faces a downward slopong demand curve

in general, a PC firm's short- run supply curve is

the rising portion of the MC curve above the minimum af AVC

it is possible for a firm under perfect competition in the short run

to earn profits or incur losses or be in a situation of no profit no loss

equilbrium is the output level at which

total profits are at maxium

if average profits = -22 when the firm produces 8 units of output, total profits made by the firm

will equal -176

Assume that a firm's MC is $5 and the elasticity of demand is -2. We can conclude that the firm's profit maximizing price is approximately $

10

A perfectly competitive firm should quit business when: (1) price does not cover average total cost. (2) price does not cover average variable cost. (3) total revenue is less than total variable cost. Which of the statements must be true?

2 and 3

The amount of the output that firm decides to sell has no effect on market price under perfect competition because

The firms output is a small fraction of the entire output supplied by the industry