Exam 12: Perfect Competition and the Supply Curve

Use the following to answer questions: Figure: The Perfectly Competitive Firm -(Figure: Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm. The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit. Given the market price, the firm's total cost per day is:

If all firms in an industry are price takers:

A perfectly competitive small organic farm produces 1,000 cauliflower heads in the short run. Its ATC = $6 and AFC = $2. The market price is $3 per head and is equal to MC. To maximize profits or minimize losses, this farm should:

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, a decrease in population decreases the demand for haircuts. In the short run, we expect that the market price will _____ and the output of a typical firm will _____.

A perfectly competitive firm maximizes profit in the short run by producing the quantity at which:

Use the following to answer question: Figure: Total Cost for Tomato Producers -(Figure: Total Cost for Tomato Producers) Look at the figure Total Cost for Tomato Producers. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $14. The farmer's total cost at the profit-maximizing number of bushels is:

Use the following to answer questions: Figure: Game-Day Shirts -(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the industry is in long-run equilibrium, the price of each shirt will be:

Why does it make sense for a firm to shut down in the short run if the price falls below minimum average variable cost?

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm's total revenue from the sale of its most profitable level of output is:

Use the following to answer questions: -(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $20, how much is Sergei's profit at the optimal short-run output?

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If all farms are the same size, how much economic profit will each farm earn when the industry is in long-run equilibrium?

A perfectly competitive industry is said to be efficient because the:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $10 per pound:

The market for new drugs is not usually perfectly competitive, since the companies manufacturing these drugs are usually granted patents, and this restricts entry into the industry.

If a perfectly competitive firm sells 300 units of output at $1 per unit, its marginal revenue is:

Use the following to answer questions: -(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. Which of the following is a point on Sergei's short-run supply curve?

Use the following to answer questions: Figure: The Perfectly Competitive Firm -(Figure: Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm. The figure shows a perfectly competitive firm that faces demand curve d maximizes profit. Given the market price, the firm's total revenue per day is:

During the summer, Alex runs a mowing service, and lawn mowing is a perfectly competitive industry. In the short run, Alex will shut down if:

Use the following to answer questions: Figure: The Profit-Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. Which of these curves is the AVC curve?

The short-run supply curve for a perfectly competitive firm is its: