Exam 9: Perfect Competition

The market for babysitting services in a small town is characterized by many families that want to hire babysitters. The three potential babysitters who are offering their services are all equally qualified, and there are no restrictions on becoming a babysitter. What feature of a perfectly competitive market does this violate?

Sally is selling homemade tamales in a market where many other firms make and sell tamales and many people want to buy homemade tamales. Everyone knows about all of the other sellers, but they are willing to pay more for Sally's tamales because they have the tastiest fillings. Why is the market for tamales not perfectly competitive?

Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn? ​

When perfectly competitive firms are said to be price takers, it means that firms:

Tandy's Teas sells iced tea in a perfectly competitive market. Tandy knows that if she tries to sell iced tea at more than $1 per glass, people will buy iced tea from her competitors. What kind of a firm is Tandy's Teas?

Why is a firm's marginal revenue curve horizontal?

Use the figure A Perfectly Competitive Market. What is the optimal quantity that a firm operating in this market should produce? ​ Figure: A Perfectly Competitive Market

Use the table The Marginal Cost of Spangles for a Firm in a Perfectly Competitive Market. What quantity should this firm produce if the price of a spangle is $9? ​

When a firm has full _____, it knows all of the relevant details about the products and prices that are available in a market.

For a perfectly competitive firm, the optimal quantity to produce is the quantity where the marginal cost of producing that quantity equals its:

. Use the figure Costs for a Firm II. What price and quantity combination is NOT part of this firm's short-run supply curve? ​ Figure: Costs for a Firm II

In imperfectly competitive markets, buyers and sellers have _____ relevant information about the products and prices available.

Chrysanthemum Industries has fixed costs of $10,000 and variable costs of $20,000 when it produces 1,000 units. The 1,000th unit costs Chrysanthemum industries $30. This perfectly competitive industry:

What happens if an individual firm in a perfectly competitive market increases its price to be slightly above the market price?

The demand curve in a perfectly competitive market is _____, and the demand curve facing an individual firm in that market is:

The market for fast food has thousands of restaurants and millions of potential customers. It is relatively easy to open a fast-food restaurant. Buyers are aware of their options and the prices of those options. However, some restaurants specialize in hamburgers, and others specialize in fried chicken. Which feature of a perfectly competitive market does the market for fast food violate?

Use the figure A Perfectly Competitive Market in the Short Run I. If the price in this market persists, what will happen in the long run? ​ Figure: A Perfectly Competitive Market in the Short Run I

Which of the following mathematical expressions accurately describes how to calculate the profit rectangle for a perfectly competitive firm?

A firm's _____ cost is its variable cost divided by quantity.

Allium Industries has fixed costs of $1,000 and variable costs of $5,000 when it produces 1,000 units. The market price of Allium Industry's product is $4. Which of the following statements is true?