Exam 22: The Competitive Firm

What serves as the supply curve for a perfectly competitive firm? Why is this supply curve upward-sloping,or why does it take a higher price to get a firm to produce and sell more output?

Suppose a firm has an annual budget of $200,000 in wages and salaries,$75,000 in materials,$30,000 in new equipment,$20,000 in rented property,and $35,000 in interest costs on capital.The owner/manager does not choose to pay himself,but he could receive income of $90,000 by working elsewhere.The firm earns revenues of $360,000 per year.What are the annual implicit costs for the firm described above?

In the short run,a firm will maximize profits if it increases output when marginal revenue is greater than marginal cost.

The best measure of the economic cost of doing your homework is

Explain why a firm maximizes its total profits by producing where MC = MR.To answer this question completely,you should explain why output levels greater than and less than the level where MC = MR do not maximize profits.

Which of the following does not affect marginal costs?

In defining economic costs,economists emphasize

The shutdown point occurs where price is below the minimum of

A change in which of the following will change the optimal rate of output?

For perfectly competitive firms,price

When technology improves,the firm's marginal cost curve shifts

Table 22.1 Assume an apple farmer incurs the following costs and revenues Fertilizer \ 200 Seeds \ 75 Water \ 250 Wages \ 750 Property taxes \ 600 Interest payments on borrowed funds \ 1,200 Bales of apples \ 4,000 The accounting profit is equal to

If a perfectly competitive firm wanted to maximize its total revenues,it would produce

If a business owner uses a warehouse he owns to store his inventory,then his total costs will be less than if he rented warehouse space from someone else.

Explain why a perfectly competitive firm has no incentive to charge a higher or lower price than the market price.

Marginal revenue is the change in

For perfectly competitive firms,marginal revenue always equals price.

Businesses that fail to account for implicit costs,like the strawberry farmer,Hiroshi Fujishige,who failed to consider the enormous opportunity of selling his property to Disneyland,will

If the equilibrium price in a perfectly competitive market for walnuts is $4.99 per pound,then an individual firm in this market can

The decision to enter or exit an industry is known as the