Exam 14: Firms in Competitive Markets

Graph 14-6 This graph depicts the cost structure of a firm in a competitive market.Use the graph to answer the following question(s). -Refer to Graph 14-6.When market price is P₁, a profit-maximising firm's total profit or loss can be represented by which area?

The exit of existing firms from a competitive market will:

A rice farmer sells rice to an Australian grain broker.Suppose that the market for rice is competitive.This means that the farmer will maximise profit by choosing:

Explain the role of opportunity costs in differentiating between economic profits and accounting profits.

The firm's short-run supply curve is the marginal cost curve above average total cost.

Total Revenue for a firm is calculated as:

The supply curve of a firm in a competitive market is equal to average variable cost, above the minimum of marginal cost.

Of the following characteristics of competitive markets, which are necessary for firms to be price takers? (i) many sellers (ii) goods offered for sale are largely the same (iii) firms can freely enter or exit the market

A profit-maximising firm in a competitive market produces leather wallets.Suppose the market price for leather wallets drops below the minimum of its average total cost.However, the price still lies above the minimum of average variable cost.This means the firm:

In a competitive market, the actions of any single buyer or seller will have a negligible impact on the market price.

Table 14-1 This table shows the revenue and costs of a parrot farmer. -Refer to Table 14-1.The maximum profit available to this farmer's firm is:

The long run supply curve for a perfectly competitive firm is the segment of the marginal cost curve that lies above the average total cost curve.

Graph 14-5 The graph depicts the cost structure of a firm in a competitive market.Use the graph to answer the following question(s). -Refer to Graph 14-5.When market price is P₂, a profit-maximising firm's losses can be represented by the area:

Graph 14-3 This graph depicts the cost structure of a profit-maximising firm in a competitive market.Use the graph to answer the following question(s). -Refer to Graph 14-3.Which line segment best reflects the short-run supply curve for this firm?

New firms will enter the market when profit-maximising firms in competitive markets are earning profits.

A competitive firm's profit can be written as:

Graph 14-4 This graph depicts the cost structure of a profit-maximising firm in a competitive market.Use the graph to answer the following question(s). -Refer to Graph 14-4.This firm will exit the market for any price on the line segment:

At the current level of output, a profit-maximising firm in a competitive market earns average revenue of $30 and has an average total cost of $26.Suppose that the firm's marginal cost curve is equal to its average total cost curve at an output level of 30 units.How much profit is earned by the firm at its current level of output?

Table 14-1 This table shows the revenue and costs of a parrot farmer. -Refer to Table 14-1.Average revenue will be equal to marginal cost when the harvest is equal to:

A profit-maximising firm in a competitive market is able to sell its product for $6.At its current level of output, the firm's average total cost is $8.Its marginal cost curve crosses the marginal revenue curve at an output level of 20 units.What is the total loss of this firm?