microeconomics chapter 9 study quiz

Refer to Figure 23.1 for a perfectly competitive firm. In the long run, this firm would stay in this market only if the market price was equal to or higher than

$15

In a perfectly competitive market economy, business failures can benefit society by causing

A reallocation of resources to better uses

The equilibrium price of a good or service in a competitive market is

A reflection of the opportunity cost of producing the product

If economic profits are earned in a competitive market, then over time

Additional firms will enter the market

High profits in a particular industry indicate that

Consumers want more of that industry's goods

For a competitive market in the long run,

Economic profits induce firms to enter until profits are normal

Which of the following is an investment decision in a competitive market?

Entry or exit

Technological improvements cause

Existing firms to produce more output

If price is above the long-run competitive equilibrium level,

Firms will enter the market

The market structure of the computer industry

Has become more competitive over time

Marginal cost is the increase in total cost associated with a one-unit

Increase in production

The exit of firms from a market, ceteris paribus,

Increases the equilibrium price in the market

When a firm is earning positive economic profits, this is an indication that the firm

Is using its resources in the best possible way

When an athletic shoe company is producing a level of output at which price is greater than MC, from society's standpoint the company is producing too

Little because society would be willing to give up more alternative goods in order to get additional shoes

The behavior expected in a competitive market includes

Marginal cost pricing

A profit-maximizing producer seeks to

Maximize total profit

In a perfectly competitive market, when price is equal to the

Minimum average total cost, economic profit is zero

When a computer firm is producing a level of output at which MC is greater than price, from society's standpoint the firm is producing too

Much because society is giving up more to produce additional computers than the computers are worth

In which of the following cases would entry and exit cease?

P = long-run ATC

To maximize profits, a competitive firm will seek to expand output until

Price equals marginal cost

A perfectly competitive market results in efficiency because

Price is driven down to minimum ATC

The entry of firms into a market, ceteris paribus,

Reduces the economic profit of each firm already in the market

If a firm finds that its marginal cost is greater than its price, it

Should reduce production

To determine the market supply, the quantities

Supplied at each price by each supplier are added together

Economic losses are a signal to producers

That they are not using resources in the best way

If the price of ricotta cheese, an ingredient in lasagna, increases, then

The market supply curve for lasagna will shift to the left

If a new sushi restaurant opens, then

The market supply curve for sushi will shift to the right

Perfectly competitive firms cannot individually affect market price because

There are many firms, none of which has a significant share of total output

The market supply curve in a perfectly competitive market is usually

Upward-sloping

Which of the following is characteristic of a perfectly competitive market?

Zero economic profit in the long run