Econ Chap 10 Hw

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In the long run,:

firms earn a normal profit.

The short-run supply curve starts at the minimum average ___ cost.

variable

Suppose Carl's Candies sells 100 boxes of candy for $4 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a total profit of:

$150.

Use the table to answer the following question. Assuming the market is perfectly competitive, what is the marginal revenue between 4 and 6 pounds of kale?

$2

Assuming the market for office paper is perfectly competitive, the profit level for the firm in the long run would be $ ___.

0

How many tomatoes will the farmer produce in the market above to maximize profits?

100 pounds

In a perfectly competitive market, assume the market price is $10 per unit, and the profit-maximizing quantity is 45 units. If the ATC at 45 units is $8, the profit/loss amount at the profit-maximizing quantity is $ ___.

90

Use the table to answer the following question. Which of the following is true about the market for kale if we assume the market is perfectly competitive?

MR = AR = Firm Demand

The extra or additional cost associated with the production of an additional unit of output is the ___ cost.

Marginal

A firm sustains a loss if:

TR < TC.

Which of the following markets would most closely resemble a perfectly competitive market?

Wheat Cucumbers Chlorine

Because the marginal revenue faced by the firm is equal to price, ___ revenue is also equal to price.

average

Marginal revenue is the:

additional revenue associated with the sale of an additional unit of output.

Perfect ___ is a market structure characterized by the interaction of large numbers of buyers and sellers in which the sellers produce a standardized or homogeneous product.

competition

In a perfectly competitive market, we assume the product is identical in the minds of ___.

consumers

As the market price decreases, all else held constant, a profit-maximizing firm can ___ (increase/decrease) its production.

decrease

The ___, the average revenue, and the marginal revenue curves for a perfectly competitive firm are the same horizontal line at the market price.

demand

When the total revenue ___ is than the total cost, the level of profit that occurs is a loss.

less

Because perfectly competitive firms are price takers, the marginal revenue is equal to the market ___.

price

All firms maximize ___ by producing the quantity of output at which the marginal revenue is equal to the marginal cost.

profit

Assuming the market for office paper is perfectly competitive, what would the long-run market price and output level be in the office paper market?

$30; 60 cases

Assuming the market for apples is perfectly competitive, what market price would result in a normal profit?

$4

Use the table to answer the question. If the market for apples is perfectly competitive, what market price would result in a normal (zero) profit?

$8.00

In a perfectly competitive market, the price the firm should charge is the market price because the firm is a price ___.

taker

If the market price is below the average variable cost, the business is not bringing in enough revenue to compensate for the ___ costs.

variable

Normal profit is also known as ___ economic profit.

zero

If the market above is perfectly competitive and the MR = $2, the profit/loss amount at the profit-maximizing quantity is ___.

-120

Use the table to answer the question. If the MR = $5.00, what is the profit-maximizing quantity and profit amount?

90 pounds, Profit = $81

In the presence of ___ profits, firms enter until the market reaches the point at which the firms are generating a(n) ___ profit; then entry stops and the market settles into its ___-run equilibrium.

Blank 1: economic or positive Blank 2: normal Blank 3: long

In the presence of ___ profits, firms enter until the market reaches the point at which the firms are generating a(n) profit ___; then entry stops and the market settles into its ___-run equilibrium

Blank 1: economic or positive Blank 2: normal Blank 3: long

Total revenue minus the ___ and ___ costs of production is economic profit.

Blank 1: explicit Blank 2: implicit

In the presence of ___, firms exit until the market reaches the point at which the firms are generating a ___ profit; then exit stops and the market settles down into its ___-run equilibrium.

Blank 1: losses Blank 2: normal Blank 3: long

In the presence of ___, firms exit until the market reaches the point at which the firms are generating ___a profit; then exit stops and the market settles down into its ___-run equilibrium.

Blank 1: losses or loss Blank 2: normal Blank 3: long

In the short run, the ___ supply curve for a firm is the ___ cost curve above or equal to the average cost curve.

Blank 1: marginal Blank 2: variable

Because the marginal revenue equals the market price for perfectly competitive firms, they should produce output until the market ___ equals the marginal ___.

Blank 1: price Blank 2: cost

All firms maximize profits by producing the quantity of output at which the marginal ___ is equal to the marginal ___.

Blank 1: revenue Blank 2: cost

Profit equals (average ___ minus average total ___) multiplied by output.

Blank 1: revenue Blank 2: cost

___ competition is a market structure characterized by the interaction of large numbers of buyers and sellers in which the sellers produce a standardized or homogeneous product.

Perfect

Which of the following is not a characteristic of perfect competition?

Producers who are price makers

Total revenue minus the implicit and explicit costs of production is ___ profit.

economic

Profit maximization implies that perfectly competitive firms should expand production up to the point where marginal revenue ___ (equals/exceeds) marginal cost.

equals

In a perfectly competitive market, a single firm is a price taker and therefore can only charge the ___ price.

equilibrium

The decision to shut down temporarily is a short-run decision, while the decision to ___ an industry can be made only in the long run.

exit

n the presence of economic losses, firms ___ (enter/exit) a perfectly competitive market until firms start earning normal profits.

exit

The marginal cost is the:

extra or additional cost associated with the production of an additional unit of output.

When a firm shuts down in the short run, it must still pay the ___ costs.

fixed

The market condition in which firms do not face incentives to enter or exit the market and firms earn a normal profit is known as ___-run equilibrium.

long

The market condition in which firms do not face incentives to enter or exit the market and firms earn a normal profit is known as:

long-run equilibrium.

If the market price is below the average variable cost, the firm is:

losing money in the short run and should shut down.

Because the ___ revenue faced by the firm is equal to price, average revenue is also constant and equal to price.

marginal

Extra or additional revenue associated with the production of an additional unit of output is the:

marginal revenue.

Profit ___ (maximization/minimization) implies that perfectly competitive firms should expand production up to the point where marginal revenue equals marginal cost.

maximization

A market structure characterized by the interaction of large numbers of buyers and sellers in which the sellers produce a standardized or homogeneous product is known as:

perfect competition.

Firms that take or accept the market price and have no ability to influence that price are ___ takers.

price

Firms that take or accept the market price and have no ability to influence that price are known as ___ takers.

price

In the short run, as the ___ rises so does the level of output supplied.

price

The demand for a perfectly competitive firm's product is a horizontal line originating at the market ___.

price

Total revenue equals:

price times quantity.

In the short run, as the price rises,:

quantity supplied rises.

Total ___ equals price times quantity.

revenue

Profit equals total ___ minus total ___.

revenue; cost

In the ___ (short/long) run, when at least one input is fixed, as the price rises so does the level of output supplied.

short

When it shuts down temporarily in the short run, a perfectly competitive firm

still incurs its total fixed costs.

As more firms enter the industry, ___ the curve will shift rightward.

supply

As more firms enter the industry, the ___ curve will shift rightward.

supply

Firms that take or accept the market price and have no ability to influence that price are known as price ___.

taker

Because perfectly competitive firms are price ___, the marginal revenue is equal to the market price.

takers

When the total revenue earned by a firm is less than the total cost of production,:

the firm faces a loss.

Changes in the variable costs of resources will affect:

the marginal costs faced by firms.

The firm's short-run supply curve is a(n) ___-sloping curve that begins at ___ average variable cost.

upward; minimum

In a perfectly competitive market, assume the market price is $5 per unit and the profit-maximizing quantity is 70 units. If the ATC at 70 units is $8, what is the profit/loss amount at the profit-maximizing quantity?

−$210

Suppose Carl's Candies sells 100 boxes of candy for $5 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a profit per unit of:

$2.50.

Suppose Carl's Candies sells 100 boxes of candy for $5 each. The total fixed cost of the 100 boxes is $100 and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a total profit of:

$250

When the total revenue is ___ than the total cost, the level of profit that occurs is a loss.

less

At the shutdown point, the price is ___ the average variable cost.

less than

The demand, the ___ revenue, and the revenue ___ curves for a perfectly competitive firm are the same horizontal line at the market price.

Blank 1: average Blank 2: marginal

___ profit creates an incentive for other perfectly competitive firms to enter the market.

Economic

Which of the following markets would most closely resemble a perfectly competitive market?

Tomatoes

Average revenue is the:

amount of revenue per unit of a product sold.

The total revenue divided by the number of units of a product sold is the ___ revenue.

average

In a perfectly competitive market, we assume the product is ___ (homogeneous/heterogeneous) in the minds of consumers.

homogeneous

In a perfectly competitive market, we assume the product is ___ in the minds of consumers. (Choose between heterogeneous orhomogeneous.)

homogeneous

The demand for a perfectly competitive firm's product is a(n) ___ line originating at the market price.

horizontal

In a perfectly competitive market, we assume the products are ___ in the minds of consumers.

identical

As the market price ___ (increases/decreases), all else held constant, a profit-maximizing firm can afford to expand its production.

increases


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