Economics Quiz 8

Pete's Paper

$50 50 50 50 100 50 50 150 50 50 200 50 50 250 50 50

Average revenue is the:

amount of revenue per unite of a product sold

Indicate why the market for cucumber is likely a perfectly competitive market

To most consumers, all cucumbers are very similar, entry into the market is free and open, producers do not have control over prices

The demand, the _ revenue and the marginal revenue curves for a perfectly competitive firm are the same horizontal line at the market price.

average

Identify the characteristics of a perfectly competitive market

a large number of buyers and sellers, producers who are price takers, easy entry and exit, a standardized product

Marginal revenue is the

additional revenue associated with the sale of an additional unit of output

The perfectly competitive model is the most efficient type of market and is characterized by both _ and _ efficiency.

allocative, productive

perfect

competition is a market structure characterized by the interaction of large numbers of buyers and sellers, in which the sellers produce a standardized, or homogeneous, product.

A perfectly competitive market involves firms that are price takers. This guarantees:

consumers receive the lowest prices

The _, the average revenue and the marginal revenue curves are perfectly competitive firm are the same horizontal line at the market price.

demand

Which of the following are reasons for the market of running shoes to be NOT a perfectly competitive market?

entry into the market is partially blocked, producers have some control over prices, running shoes are not standardized

Identify the conditions that guarantee consumers will enjoy the lowest prices possible

every firm produces the exact same product, individual firms are price takers

Identify the conditions that guarantee consumers will enjoy the lowest prices possible.

individual firms are price takers, every firm produces the exact same product

Because the _ revenue faced by the firm is equal to price, average revenue is also constant and equal to price.

marginal

Extra or additional revenue associated with the production of an additional unit of output is the

marginal revenue

For a perfectly competitive firm, the market price is equal to:

marginal revenue, demand, average revenue

horizontal mr curve market price 50

mr curve shifts down by 10 from 50 to 40

The _ competition model is the most efficient type of market and is characterized by both productive and allocative efficiency.

perfect

A market structure characterized by the interaction of large numbers of buyers and sellers, in which the sellers they produce a standardized or homogeneous product, is known as:

perfect competition

The demand curve facing an individual perfectly competitive firm is _ elastic.

perfectly

In a perfectly competitive market, homogeneity means that firms must charge the market price for the goods or the services they produce, because:

there are hundreds of other perfectly good substitutes, the market is competitive

the price of a good times the number of unites sold gives us

total revenue

the amount of revenue produced per unit of an output sold is the _ revenue.

average