Exam 14: Firms in Competitive Markets

A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average variable cost but greater than the firm's average fixed cost.

Scenario 14-1 Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. -Refer to Scenario 14-1. To maximize its profit, the firm should

When a profit-maximizing firm's fixed costs are considered sunk in the short run, then the firm

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 marginal cost is

Scenario 14-2 Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. -Refer to Scenario 14-2. At Q = 1,000, the firm's profits equal

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. If the market price is $10, what is the firm's total revenue?

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

Which of the following statements is not correct about competitive firms?

Scenario 14-1. A competitive firm sells its output for $20 per unit. When the firm produces 200 units of output, average variable cost is $16, marginal cost is $18, and average total cost is $23. -Refer to Scenario 14-1. Is the firm maximizing its profit (or minimizing its loss) by producing 200 units of output?

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

If a firm in a competitive market doubles its number of units sold, total revenue for the firm will

When buyers in a competitive market take the selling price as given, they are said to be

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? (i)Marginal revenue equals $3. (ii)Average revenue equals $600. (iii)Average revenue exceeds marginal revenue, but we don't know by how much.

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

In the short run, a firm should exit the industry if its marginal cost exceeds its marginal revenue.

Which of the following is not a characteristic of a perfectly competitive market?

A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost.

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 marginal revenue is

Figure 14-12 -Refer to Figure 14-12. If the figure in panel (a) reflects the long-run equilibrium of a profit-maximizing firm in a competitive market, the figure in panel (b) most likely reflects

Consider a firm that operates in a perfectly competitive market. Currently the firm is producing 300 units of output and the price is $20. If marginal cost at 300 units is $22, the firm