microeconomics chapter 9 study quiz
Refer to Figure 23.1 for a perfectly competitive firm. In the long run, this firm would stay in this market only if the market price was equal to or higher than
$15
In a perfectly competitive market economy, business failures can benefit society by causing
A reallocation of resources to better uses
The equilibrium price of a good or service in a competitive market is
A reflection of the opportunity cost of producing the product
If economic profits are earned in a competitive market, then over time
Additional firms will enter the market
High profits in a particular industry indicate that
Consumers want more of that industry's goods
For a competitive market in the long run,
Economic profits induce firms to enter until profits are normal
Which of the following is an investment decision in a competitive market?
Entry or exit
Technological improvements cause
Existing firms to produce more output
If price is above the long-run competitive equilibrium level,
Firms will enter the market
The market structure of the computer industry
Has become more competitive over time
Marginal cost is the increase in total cost associated with a one-unit
Increase in production
The exit of firms from a market, ceteris paribus,
Increases the equilibrium price in the market
When a firm is earning positive economic profits, this is an indication that the firm
Is using its resources in the best possible way
When an athletic shoe company is producing a level of output at which price is greater than MC, from society's standpoint the company is producing too
Little because society would be willing to give up more alternative goods in order to get additional shoes
The behavior expected in a competitive market includes
Marginal cost pricing
A profit-maximizing producer seeks to
Maximize total profit
In a perfectly competitive market, when price is equal to the
Minimum average total cost, economic profit is zero
When a computer firm is producing a level of output at which MC is greater than price, from society's standpoint the firm is producing too
Much because society is giving up more to produce additional computers than the computers are worth
In which of the following cases would entry and exit cease?
P = long-run ATC
To maximize profits, a competitive firm will seek to expand output until
Price equals marginal cost
A perfectly competitive market results in efficiency because
Price is driven down to minimum ATC
The entry of firms into a market, ceteris paribus,
Reduces the economic profit of each firm already in the market
If a firm finds that its marginal cost is greater than its price, it
Should reduce production
To determine the market supply, the quantities
Supplied at each price by each supplier are added together
Economic losses are a signal to producers
That they are not using resources in the best way
If the price of ricotta cheese, an ingredient in lasagna, increases, then
The market supply curve for lasagna will shift to the left
If a new sushi restaurant opens, then
The market supply curve for sushi will shift to the right
Perfectly competitive firms cannot individually affect market price because
There are many firms, none of which has a significant share of total output
The market supply curve in a perfectly competitive market is usually
Upward-sloping
Which of the following is characteristic of a perfectly competitive market?
Zero economic profit in the long run