Exam 23: Perfect Competition

A perfectly competitive market is initially in long-run competitive equilibrium.Then,market demand falls.By the time all adjustments have been made,price will be __________ its original level if the industry witnesses __________ costs.

A constant-cost industry has a long-run (industry)supply curve that is

Exhibit 23-8 -Refer to Exhibit 23-8.What is the total fixed cost of Firm A at the point where it produces in the short run?

If firms are earning zero economic profits,they must be producing at an output level at which

Assume a constant-cost industry that is initially in long-run competitive equilibrium.An increase in demand will cause a(n)__________ in prices and profits,and as a result,firms will __________ the industry,causing the market supply curve to shift __________,which,in turn,will eventually cause the equilibrium price to be __________ before.

What is the shape of the demand curve faced by the perfectly competitive firm? Why?

For a perfectly competitive firm,profit maximization or loss minimization occurs at the output at which

Assume a decreasing-cost industry that is initially in long-run competitive equilibrium.A decrease in demand will cause a(n)__________ in prices and profits,and as a result,firms will __________ the industry,causing the market supply curve to shift __________,which,in turn,will eventually cause the equilibrium price to be __________ before.

If MR > MC,then

Exhibit 23-8 -Refer to Exhibit 23-8.What is the total variable cost of Firm B at the profit-maximizing level of production?

A perfectly-competitive firm produces 2,000 units of a good during some period of time.For the 2,000th unit,marginal cost is equal to marginal revenue.The difference between marginal revenue and marginal cost is greater for the first unit the firm produces than the second,and greater for the second than the third,and so on.Furthermore,marginal revenue is greater than marginal cost for every unit from the first to the 1,999th.It follows that the

In a perfectly competitive market,if a resource that one firm utilizes is superior to resources used by other firms,and,as a result,lowers unit costs for the firm,that firm is likely to earn __________ in the short run.In time,however,the firm's __________ curve will rise to reflect the superior-quality of the resource it employs and the firm will then earn __________.

Exhibit 23-1 -Refer to Exhibit 23-1.The firm's demand curve represented by the information in this table is

A perfectly competitive market is initially in long-run competitive equilibrium.Then,market demand increases.As a result,existing firms in the market begin to __________.By the time all adjustments have been made,profits will __________.

A decreasing-cost industry has a long-run supply curve that is upward sloping.

The perfectly competitive firm's short-run supply curve is the

When the government imposes taxes on firms that are earning high profits,there could be an unintended effect of reducing the supply of goods in that market compared to what the supply would be if the profits were not taxed.

Why is profit maximized at the level of output where marginal revenue equals marginal cost?

In a perfectly competitive market,the market demand curve is perfectly elastic.

The perfectly competitive firm will shut down in the short run if price is