Exam 14: Firms in Competitive Markets

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 the total revenue from selling 5 units?

Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-9. If there are 100 identical firms in this market, what is the value of Q2?

What name do economists have for a cost that has already been committed and cannot be recovered?

Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands falls below the minimum of its average total cost, but still lies above the minimum of average variable cost, in the short run the firm will

If the profit-maximizing quantity of production for a competitive firm occurs at a point where the firm's average total cost of production is falling as production increases, then the firm

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

Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands rises above the minimum of its average variable cost, but still lies below the minimum of average total cost, in the short run the firm will

A key characteristic of a competitive market is that

As a general rule, when accountants calculate profit they account for explicit costs but usually ignore

All competitive firms earn zero economic profit in both the short run and the long run.

Table 14-4 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-4. For this firm, the average revenue is

When a profit-maximizing firm is earning profits, those profits can be identified by

Figure 14-9 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-9. Which line segment best reflects the long-run supply curve for this firm?

Suppose a firm in each of the two markets listed below were to increase its price by 15 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales, but the firm in the second market listed would not?

When firms are neither entering nor exiting a perfectly competitive market,

Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70. What would you advise Mr. Raiman to do?

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

In the long run with free entry and exit and identical firms, are competitive firms' profits positive, zero, or negative?

The marginal firm in a competitive market will earn zero economic profit in the long run.

A competitive firm would benefit from charging a price below the market price because the firm would achieve (i)higher average revenue. (ii)higher profits. (iii)lower total costs.