Exam 12: Perfect Competition and the Supply Curve

Use the following to answer question: -(Table: Variable Costs for Lawns)Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between).His only fixed cost is $1,000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $70,how much is Alex's total revenue at the profit-maximizing output?

Use the following to answer question: -(Figure: Game-Day Shirts)Use Figure: Game-Day Shirts.Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market.His costs are identical to the costs of the other 9 vendors.If the price of a shirt is $11,the short-run industry supply will be _____ shirts.

Tony runs Read Economic Reports.If Tony finds that the cost of completing an additional report is $100 and someone offers him $125 to complete this additional report,Tony should:

In perfect competition,the profit-maximizing level of output occurs where the:

When a firm produces at an output level at which MR = MC,it is operating at the _____ level.

Use the following to answer question: -(Table: Variable Costs for Lots)Use Table: Variable Costs for Lots.During the winter,Alexa runs a snow-clearing service in a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of clearing each of the lots from 1 through 10 is $20.Also assume that she can only plow the quantities of the lots given in the table (and not numbers in between).Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel,her time,and hot coffee.What is Alexa's shut-down price in the short run?

Use the following to answer question: -(Figure: A Perfectly Competitive Firm in the Short Run)Use Figure: A Perfectly Competitive Firm in the Short Run.The firm will produce in the short run if the price is greater than or equal to:

Zoe's Bakery operates in a perfectly competitive industry and has standard cost curves.The variable costs at Zoe's Bakery increase,so all of the cost curves (except fixed cost)shift upward.The demand for Zoe's pastries does not change,nor does the firm shut down.To maximize profits after the variable cost increase,Zoe's Bakery will _____ its price and _____ its level of production.

In a perfectly competitive industry,each firm:

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit.Given the market price,the firm's total revenue per day is:

The market for breakfast cereal contains hundreds of similar products,such as Froot Loops,cornflakes,and Rice Krispies,that are considered to be different products by different buyers.This situation violates the perfect competition assumption of:

Use the following to answer question: -(Table: Variable Costs for Lots)Use Table: Variable Costs for Lots.During the winter,Alexa runs a snow-clearing service in a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of clearing each of the lots from 1 through 10 is $20.Also assume that she can only plow the quantities of the lots given in the table (and not numbers in between).Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel,her time,and hot coffee.If the price to clear a lot is $60,how many lots should Alexa clear?

A perfectly competitive firm will not produce any output in the short run and will shut down if the price is:

Price takers are individuals in a market who:

The long-run industry supply curve is usually more elastic than the short-run industry supply curve,but if entering firms make intensive use of an input that is in limited supply,then it is possible for the long-run curve to be less elastic than the short-run curve.

Use the following to answer question: -(Figure: A Perfectly Competitive Firm in the Short Run)Use Figure: A Perfectly Competitive Firm in the Short Run.The firm's total revenue from the sale of its most profitable level of output is:

A firm produces at the output level at which its average total costs are minimized.At this output level,its average total costs are NOT equal to:

Use the following to answer question: -(Figure: Revenues,Costs,and Profits for Tomato Producers)Use Figure: Revenues,Costs,and Profits for Tomato Producers.The market for tomatoes is perfectly competitive.The market price of a bushel of tomatoes is $18.At the profit-maximizing quantity of output in the figure,the farmer's total revenue is _____,total cost is _____,and economic profit is _____.

Use the following to answer question: -(Table: Cherry Farm)Use Table: Cherry Farm.Suppose there are 100 farms in this industry with identical cost curves,as shown in the table.If the price is $3.60 per pound:

If a perfectly competitive firm is producing a quantity where P < MC,then profit: