Exam 14: Firms in Competitive Markets

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. In the short run, if the market price is P4, individual firms in a competitive industry will earn

Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Explain your answer.

Scenario 14-4 The information below applies to a competitive firm that sells its output for $40 per unit. • When the firm produces and sells 150 units of output, its average total cost is $24.50. • When the firm produces and sells 151 units of output, its average total cost is $24.55. -Refer to Scenario 14-4. When the firm increases its output from 150 units to 151 units, its profit

When firms are said to be price takers, it implies that if a firm raises its price,

Scenario 14-5 A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats. As a result of national press coverage of the report, the demand for irradiated tomatoes increased dramatically. Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost. Assume that the tomato market satisfies all of the assumptions of perfect competition. -Refer to Scenario 14-5. If the increased production of irradiated tomatoes caused a rise in the marginal transportation costs of moving irradiated tomatoes to market, the

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will earn positive profits in the short run if the market price

Figure 14-7 -Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

When new firms have an incentive to enter a competitive market, their entry will

If there is an increase in market demand in a perfectly competitive market, then in the short run

Which of the following industries is least likely to exhibit the characteristic of free entry?

If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements, we would expect that

Why does a firm in a competitive industry charge the market price?

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. What is Bob's total fixed cost?

If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market.

In a long-run equilibrium, the marginal firm has

In a perfectly competitive market, the market supply curve is

A firm maximizes its profit by selling 2,500 units of output with an average revenue of $6.99. The firm's marginal cost at 2,500 units of output is __________.

In a competitive market with free entry and exit, if all firms have the same cost structure, then

When price is greater than marginal cost for a firm in a competitive market,