Ch 6 - Perfectly Competitive Supply

Suppose that when the price of tomatoes is $2 per pound, there are 5 farmers each willing to supply 10 pounds per day, and 3 farmers each willing to supply 20 pounds per day. Thus, when the price of tomatoes is $2 per pound, the market supply of tomatoes is ___ pounds per day.

$110 (50 x 10) + (3 x 20) = $110

If Mitch's Surf Shop has $30,000 in revenue each month and if the total cost of operating the shop is $26,000 each month, then the monthly profit for Mitch's Surf Shop is ___.

$4000 Reason: $30000 - $26000 = $4000

Given the figure on the right, if strawberries sell for $3 per pound, producer surplus is ___ dollars per day.

$45000 (1/2)(30000 pounds/day)(3 ($/pound) = 45000

If Wahoo's Fish Tacos earns $75,000 revenue and incurs a total cost of $68,000 per month, then the monthly profit for Wahoo's Fish Tacos is ___ dollars.

$7000

For a firm that produces bread, which of the following is likely to be a factor of production?

1. Ovens 2. Flour 3. Bakers

Suppose that when the price of apples is 25 cents each, there are 10 farmers who each supply 600 apples per day, and 2 farmers who each supply 1,000 apples per day. Thus, when the price of apples is 25 cents, the market supply of apples is

8000 (10x600) + (2x1000) = 8000

A factor of production is ___.

an input used in the production of a good or service

The period of time of sufficient length that all of the firm's factors of production are variable is known as the _____.

long run

Firms in perfectly competitive markets face demand curves that are ___.

perfectly elastic

The difference between the total revenue of a firm and all costs (explicit and implicit) incurred by the firm is called ___.

profit

Fixed cost + variable cost =

total cost

Profit equals _____.

total revenue minus total cost