Assignment 10 & 11 Answers

A purely competitive seller is:

a "price taker."

Refer to the above diagram showing the average total cost curve for a purely competitive firm. Suppose this firm is maximizing its total profit and the market price is $15. The firms per unit profit is:

a positive amount less than $5.

For a purely competitive seller, price equals:

all of these.

Refer to the above diagram showing the average total cost curve for a purely competitive firm. At the long-run equilibrium level of output, this firm's total revenue:

is $400

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:

marginal revenue and marginal cost.

When a purely competitive firm is in long-run equilibrium:

price equals marginal cost.

The term productive efficiency refers to:

the production of a good at the lowest average total cost.

Allocative efficiency is achieved when the production of a good occurs where:

P = MC

Refer to the above diagram. The firm will shut down at any price less than:

P1

Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:

P2

Refer to the diagram. This firm will earn only a normal profit it product price is:

P3