Exam 22: Aprice Takers and the Competitive Process

(I)A firm's short-run supply curve is equal to its average variable cost curve above marginal revenue. (II)The short-run supply curve for a price-taker market is the horizontal sum of the supply curves of all firms in the industry.

If a competitive price-taking firm is operating in long-run equilibrium and market demand suddenly falls,the short-run result will be

A profit-maximizing firm will continue to expand output

If a firm is losing money,this implies that

The market for a competitive price-taker market clears at a price of $3,and the minimum average cost for all firms is $2.50.In the long run,we would expect an increase in

If there is an increase in market demand in a competitive price-taker market,then in the short run

If a product is manufactured under conditions of constant cost,an increase in the demand for the product will increase

The dynamic process of competition

In a constant cost industry,

Which of the following business decisions will be made by firms that are price searchers but not those that are price takers?

If you were the owner of a price-taker firm operating at an output level where the marginal cost of producing another unit was $5,and the market price was $7,then you

Table 9-1 -Refer to Table 9-1.If the market price is $500,what is the maximum economic profit per month the Tuckers can earn?

A firm that must sell its output at a market-determined price is called a

Suppose product price is $24;MR = MC at Q = 200;AFC = $6;AVC = $16.What do you advise this competitive price-taker firm to do?

The marginal revenue of a price taker is

Suppose antitheft auto alarms are produced in a price-taker market that is initially in long-run equilibrium.It is estimated that only 23 percent of all autos have alarms.Due to rising auto theft,Congress mandates alarms in every vehicle.Assume complete compliance.If the industry is an increasing cost industry,price will

Suppose a restaurant that is highly profitable during the summer months is unable to cover its total cost during the winter months.If it wants to maximize profits,the restaurant should

The schedule of total costs for a table-manufacturing company is presented in the table below.The firm sells its product in a price-taker market at $120 per table.What is the maximum monthly profit (or minimum loss)that the firm will be able to earn?

When a firm in a competitive market is earning profits,this indicates that the firm is

There are 1,000 identical firms in a price-taker industry.In the short run,total revenues of each firm exceed total costs.What will happen in the long run?