MICROECONOMICS CH 8

If the price that a firm charges is lower than its _____________ of production, the firm will suffer losses.

average cost

Economic profit can be derived from calculating total revenues minus all of the firms costs,

including its opportunity costs.

Under perfect competition, any profit-maximizing producer faces a market price equal to its

marginal costs

Idaho farmers can sell as large a quantity of their potato crop as they wish,

provided each is willing to accept the prevailing market price.

For a perfectly competitive firm, the marginal cost curve is identical to the firms?

supply curve

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 manufacturer would likely make an entry in a market following the long-run process of beginning and expanding production in response to _________________.

A sustained pattern of profits

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

Price of competing products

When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is

preparing to exit operations.

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.