Exam 12: Perfect Competition

Fresno County, California is the largest agricultural producing county in the country and almonds are an important crop with more than 99,000 acres harvested. Each acre produces about a ton of almonds and sold at a price of $4300 a ton. The Sagardia Brothers grew 600 acres of almonds. What would happen if the Sagardia Brothers priced their almonds at $4000 a ton?

-In the above figure, when the firm produces output corresponding to point c, the firm's marginal cost

-The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

In the short run, a perfectly competitive firm

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

When the market demand increases in a perfect competition, the long-run result is a larger number of firms, a higher price, and a permanent economic profit for the firms.

A perfectly competitive firm's marginal cost exceeds its marginal revenue at its current output. To increase its profit, the firm will

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's shut down in the short run?

The USDA maintains ethanol has an impact on food prices. "Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is true if the production of ethanol increases?

-In the above figure, if the price is P₁, the firm is

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 and if Archibald's does not shut down, what is the firm's profit-maximizing output?

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's exit the market in the long run?

The USDA maintains ethanol has an impact on food prices. "Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run in the corn market, what is true if the production of ethanol increases?

"For a perfectly competitive market, an economic profit attracts new firms. But when these firms enter the market, the price falls and the economic profit is eliminated." Are the previous statements correct or incorrect? What is the long-run profit or loss outcome for firms in a perfectly competitive market?

Which of the following statements is TRUE?

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is $3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to $2.50 per bushel. In the long run, the price of corn is ________ and a typical farm produces ________ bushels of corn.

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be