BECO Test 2 CH.14
its fixed costs but not its variable costs
A firm that shuts down temporarily has to pay
$1,600.
Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is
free entry and exit by firms.
Competitive markets are characterized by
change in profit
For a firm, marginal revenue minus marginal cost is equal to
average revenue and the price for all levels of output
For an individual firm operating in a competitive market, marginal revenue equals
Stella's Fashion Jewelry total revenue must be proportional to its quantity of output.
If Stella's Fashion Jewelry sells its product in a competitive market, then
a one-unit decrease in output will increase the firm's profit.
If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
its average total cost is less than $10.
If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then
double.
If a firm in a competitive market doubles its number of units sold, total revenue for the firm will
profits will rise.
If there is an increase in market demand in a perfectly competitive market, then in the short run
give riding lessons to fewer than 20 children per month.
Robin owns a horse stable and riding academy and gives riding lessons for children at "pony camp." His business operates in a competitive industry. Robin gives riding lessons to 20 children per month. His monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should
$30 and 100 units
Suppose a firm in a competitive market earned $3,000 in total revenue and had a marginal revenue of $30 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?
remain unchanged.
Suppose a firm in a competitive market increases its output by 20 percent. As a result, the price of its output is likely to
profit is maximized.
The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which
typically be more elastic than the short-run supply curve
The long-run market supply curve in a competitive market will
new firms will enter the market.
When profit-maximizing firms in competitive markets are earning profits,
Entry is limited.
Which of the following is not a characteristic of a competitive market?
Shut down if TR < VC
Which of the following represents the firm's short-run condition for shutting down?
For all firms, average revenue equals the price of the good.
Which of the following statements regarding a competitive firm is correct?
You should go home and read a book.
You purchase a $30, nonrefundable ticket to a play at a local theater. Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show. Alternatively you could leave the theater and go home and watch TV or read a book. You place an $8 value on watching TV and a $12 value on reading a book.
