Chapter 15 Micro
A perfectly competitive firm is producing 50 units of output and selling at the market price of $23 the firms average total cost is $20 what is the firms total cost?
$1,000
A perfectly competitive firm is producing 50 units of an output and selling at the market price of $23 the firms average total cost is $20 what is the firms economic profit
$150
In the short run, a perfectly competitive firm
Can possibly earn an economic profit or possibly incur an economic loss
If a perfectly competitive seller is maximizing profit and is earning zero economic profit which of the following will this seller do
continue current output earning normal profit
When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will
decrease
If a perfectly competitive firm raised the price of its product
the quantity of output it sells decreases to zero
Normal profit is
the return to entreprenuership
The market supply in the short run for the perfectly competitive industry is
the sum of the supply schedules of all firms
One requirement for an industry to be perfectly competitive is that
there is no restrictions to entry into or exit from the market
under which of the following conditions will a profit maximizing perfectly competitive firm shut down in the short run
when the price is less than its minimum average variable cost
In the long run perfectly competitive firm earns
zero economic profit
Perfect competition is characterized by all of the following except
considerable advertising by individual firms
Which one of the following is the best example of a perfectly competitive market
Farming
A perfectly competitive firms demand curve is horizontal because
I. the firm is so small , relative to the market, that it cannot affect the market price II. there are many perfect substitutions for its product III. the firm cannot sell any output at a price higher than the market price
For a perfectly competitive firm, profit is maximized at the output level where
I. total revenue exceeds total cost by the largest amount II. Marginal revenue equals marginal cost III. price equals marginal cost
In which market structures do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit.
Only perfect competition
A perfectly competitive firm
Sells a product that has perfect substitutes
When new firms enter the perfectly competitive Miami Bagel market the market
Supply curve shifts rightward
A perfectly competitive market arises when
The market demand is very large relative to the output of one seller
In a perfectly competitive market one farmers barley is
a perfect substitute for another farmers barley
A firm that is a price taker faces
a perfectly elastic demand curve
In the long run perfectly competitive firms produce at the output level that has the minimum
average total cost
If the technology associated with producing fiber optic cable continues to advance over time the cost of producing fiber optic cable will
decrease, firms that use the new technology will earn an economic profit and in the long run new firms will enter the market
For the perfectly competitive broccoli producers in California the market demand curve for broccoli is
downward sloping
If Henry a perfectly competitive lime grower in South California can sell his limes at a price greater than his average total cost, henry will
earn an economic profit
In a perfectly competitive industry when a firm is producing so that its total revenue equals its total cost the firm is
earning zero economic profit, that is, earning normal profit
Henry a perfectly competitive lime grower in Southern California notices that the market price of lime is greater than his marginal cost what should henry do?
expand his output to increase profit
For a perfectly competitive firm the price of its good is equal to the firms marginal revenue because
individual perfectly competitive firms cannot influence the market price by changing their output
In perfect competition , marginal revue
is equal to market price
a perfectly competitive firms short run supply curve is
its marginal cost curve above the AVC curve
In the long run , perfectly competitive firms will exit the market if price is
less than the average cost
a firm in perfect competition is a price taker because
many other firms produce identical products
A firms over riding objective is to
maximize economic profit
When firms in a perfectly competitive market are earning an economic profit, in the long run
new firms will enter the market
the four market types are
perfect competition, monopoly, monopolistic competition, and oiligopoly
a perfectly competitive firm can
sell all of its output at the prevailing market price
marginal revenue is
the change in total revenue from a one unit increase in quantity sold
