Exam 12: Firms in Perfectly Competitive Markets

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5. If the market price is $20, what is the amount of the firm's profit?

Of the following industries, which are perfectly competitive? For those that are not perfectly competitive, explain why. a. Restaurants b. Corn c. College education d. Local radio and television

Figure 12-10 -Refer to Figure 12-10. At the profit-maximizing output level, the firm earns

Letters are used to represent the terms used to answer this question: price (P), quantity of output (Q), total cost (TC) and average total cost (ATC). Which of the following equations is equal to a firm's profit?

Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $12. Which of the following will happen?

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000. The prevailing market price is $48. Assuming that this firm continues to produce in the long run, what happens to output level in the long run?

Figure 12-11 -Refer to Figure 12-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium

What is the relationship among the following variables for a perfectly competitive firm: the market price, average revenue and marginal revenue?

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

A perfectly competitive firm breaks even at a price equal to its minimum average total cost.

Figure 12-20 -Refer to Figure 12-20. If the market price is P₁, what is the allocatively efficient output level?

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4. What is the amount of its total fixed cost?

If the market price is $25, the average revenue of selling five units is

Figure 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-9. If the firm chose to produce at price P₁, the firm would

If a perfectly competitive firm's price is above its average total cost, the firm

How are market price, average revenue, and marginal revenue related for a perfectly competitive firm and why?

Table 12-1 Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 12-1. If the market price of each camera case is $8, what is the firm's total revenue when the profit-maximizing quantity is found at the output where MR = MC?

A perfectly competitive firm's marginal revenue

Table 12-4 Table 12-4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units. -Refer to Table 12-4. If the market price is $45, the firm

Using two graphs, illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market. On the first graph, use a supply and demand graph to illustrate the positive technological change. On the second graph, use demand, ATC, MC, and MR curves to illustrate the elimination of economic profit resulting from the positive technological change. Explain what is taking place in each graph.