Exam 14: Firms in Competitive Markets

If all existing firms and all potential firms have the same cost curves,there are no inputs in limited quantities,and the market is characterized by free entry and exit,then the long-run

Mrs.Smith is operating a firm in a competitive market.The market price is $6.50. At her profit-maximizing level of output,her average total cost of production is $7.00 and her average variable cost of production is $6.00.

When new firms enter a perfectly competitive market,

A long-run supply curve is flatter than a short-run supply curve because

Give two reasons why the long-run industry supply curve may slope upward.Use an example to demonstrate your reasons.

In a competitive market with free entry and exit,the process of entry and exit ends when,for the typical firm in the market,

When a competitive firm triples the amount of output it sells,

When a perfectly competitive firm decides to shut down,it is most likely that

Cold Duck Airlines flies between Tacoma and Portland.The company leases planes on a year-long contract at a cost that averages $600 per flight.Other costs (fuel,flight attendants,etc.)amount to $550 per flight.Currently,Cold Duck's revenues are $1,000 per flight.All prices and costs are expected to continue at their present levels.If it wants to maximize profit,Cold Duck Airlines should

Figure 14-6 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-6.If there are 200 identical firms in this market,what level of output will be supplied to the market when price is $1.00?

Scenario 14-3 In March of 2000 a study sponsored by the Food Consumer Safety Board found that consumption of irradiated grapefruit increased the health of laboratory rats. As a result of national press coverage of the report, the demand for irradiated grapefruit increased dramatically. Organic farmers were able to switch from organic production of grapefruit to irradiated production with no additional cost. Assume that the grapefruit market satisfies all of the attributes of perfect competition. -Refer to Scenario 14-3.As a result of the increase in the demand for grapefruit,we would predict that in the short run that the

Suppose you bought a ticket to a football game for $30,and that you place a $35 value on seeing the game.If you lose the ticket,then what is the maximum price you should pay for another ticket?

For any given price,a firm in a competitive market will maximize profit by selecting the level of output at which price intersects the

When new firms have an incentive to enter a competitive market,their entry will

The firm will make the most profits if it produces the quantity of output at which

A competitive market will typically experience entry and exit until accounting profits are zero.

Table 14-4 The following table presents cost and revenue information for John's Vineyard. -Refer to Table 14-4.What is the marginal cost of the 8th unit?

When a profit-maximizing firm in a competitive market has zero economic profit,accounting profit

A profit-maximizing firm in a competitive market is currently producing 200 units of output.It has average revenue of $9 and average total cost of $7.It follows that the firm's

Table 14-4 The following table presents cost and revenue information for John's Vineyard. -Refer to Table 14-4.What is the marginal cost of the 5th unit?