Kelly Chapter 6
If a perfectly competitive firm can sell 500 computers at $600 each, in order to sell one more computer, the firm:
Can sell the next computer at $600
In a perfectly competitive market with the positive economic profits:
Firms will enter until economic profits are zero
The market supply curve will shift due to a change in all of the following except:
the current income of buyers
A monopoly firm is one that produces
the entire market supply of a particular good or service
A catfish farmer, in a perfectly competitive market:
would like to keep other potential catfish producers out of the market but cannot do so.
Are their barriers to Entry in a competitive market. YES or NO
yes, they are low barriers
Market Structure is?
# and relative size of firms in an industry
Total Profit can be computed 2 ways. 1___________? 2.__________?
1. Total revenue- total cost 2. PRofit per unit X quanity sold
ECONOMIC PROFITS ATTRACT FIRMS----then 1. Industry output________ 2. Market supply curve shifts to the _______ as entry increases 3.Price______
1. increases 2. right 3. falls
Which of the following is a characteristic of a perfectly competitive market structure? Many Firms, Low barriers to entry, Zero economic profit in the long run, or All the Above
All the above
Marginal Cost is
Cost to make one more
In making a production decision, an entrepreneur:
Determines the short-run rate of output.
When economic losses exist in a perfectly competitive market, the number of suppliers will increase and the market price will increase. T or F
F. Decrease, and increase
Business firms attempt to maximize total output. T or F
F. profit
A perfectly competitive firm is a price taker because:
It has no control over the selling price of its product
In a oligopoly, a few
Large firms supply all or most of a particular product
Total profits are maximized only where p=______
MC
Efficiency is?
Maximum output of a good from resources used in the production
In which of the following types of markets does a single firm have the most market power.
Monopoly
A competitive is one in which
No (1) buyer or (1) seller has market power
Which of the following conditions always characterizes a firm that is maximizing profits in the short run?
Price equals marginal cost
Competitive firm is a price maker or price taker??
Price taker
Important influences on marginal cost and supply behavior are:
Supply shifts
Competitive markets provide society with the best answer to the WHAT to produce question because competitive firms produce where price equals marginal cost. T or F
T
If a perfectly competitive firm were to raise its price above the market price, it would lose all of its customers. T or F
T
In a perfectly competitive market, the individual firm's demand curve is horizontal
T
Prices in perfect competition are determined by the market; individual firms have no control over this price. T or F
T
When some firms are forced out of a market due to economic losses the result is a better use of our scarce resources. T or F
T
The market demand curve in a perfectly competitive market is downward sloping because:
The Law of Demand
Total Revenue is ___________ X ___________
Units sold X sales price
The market mechanism works best in _______________ markets
competitive
The market demand curve is always
downward sloping and to the right
Additional firms will enter the industry when?
profits are plentiful
New firms continue to enter a competitive industry so long as ?
profits exist
The difference between the total cost and total revenue curves at a given output is :
total profit
In a duopoly, only
two firms supply particular product