Exam 7: Perfect Competition and the Invisible Hand

The following figure illustrates the demand and supply curves for a good. -Refer to the figure above.Which of the following is likely to happen if a price control of $40 is imposed?

Which of the following statements is true?

A bilateral negotiation is a bargaining mechanism in which ________.

A firm owns two production plants. The following figures depict the cost curves for each plant. One homogenous good is produced in both plants. -Refer to the figure above.In the short run,if the market price is $6 the firm should ________.

The following figure represents the cost curves of two firms operating in different perfectly competitive industries. This economy consists only of industries 1 and 2. -Refer to the figure above.If the market price in industry 1 is $7 and the market price in industry 2 is $3,we should expect ________ in the long run.

When two firms in a perfectly competitive market seek to maximize profit in the long run,they eventually end up ________.

The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive industry. -Refer to the figure above.What price does the firm face in the market?

The following figure illustrates the demand and supply curves for a good in a competitive market. -Refer to the figure above.What is the equilibrium price of this good?

Consumer surplus is the ________.

The tables below show reservation values of buyers and sellers in a market. There are three buyers and two sellers. Each buyer's reservation values for the fourth unit and above are negative, and each seller can produce at most four units. -Refer to the tables above.Suppose that Buyer 1 buys the first unit of Seller 1,Buyer 2 buys the first unit of Seller 2,and Buyer 3 buys the second and the third units of Seller 2.What is the social surplus?

The phenomenon that causes resources in perfectly competitive industries to shift toward their highest valued use in the long run is for entry and exit to occur until ________.

Suppose that a central planner in a country determines how much a physician is paid based on the value of inputs to his or her service.So,a specialist such as an oncologist would be paid more than a primary care physician.Which of the following best describes an incentive problem created by this method of payment determination?

The U.S.coal industry has endured several years of economic losses as natural gas has replaced coal in electricity generation and other uses.At the same time,the solar panel industry in the United States has recorded large positive economic profits.If these markets are perfectly competitive,we would expect ________.

A seller is willing to sell 5 units of a good at a minimum price of $1 per unit.The reservation value of the seller in this case is ________.

The following figure shows the marginal cost curves of two profit-maximizing firms-Firm A and Firm B-in a perfectly competitive market. -Refer to the figure above.Which of the following statements is true?

The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive industry. -Refer to the figure above.What is the total cost of the firm when it produces the profit-maximizing level of output?

Why is it likely that a market economy will perform better than a command economy?

Scenario: Suppose a competitive market has ten buyers and ten sellers. The product exchanged in this market is beach hats, which are indivisible. The following table shows the reservation values for both buyers and sellers. -Refer to the scenario above.Suppose the equilibrium price in this market is $10.What is the amount of social surplus in this market?

Scenario: A manufacturing firm operates three plants with the marginal cost curves shown in the figure and the average total costs summarized in the table below. -Refer to the scenario above.If the market price of the firm's product is $80 per 100 kg,what is the firm's profit?

If exit occurs from the U.S.coal industry and entry occurs into the U.S.solar panel industry,we would expect ________.