Exam 12: Firms in Perfectly Competitive Markets

In 2015, poultry farmers were able to sell cage-free eggs for a price that more than offset the higher costs of raising cage-free chickens. By 2019, most of that higher return had been wiped out by the entry of additional farmers into the cage-free egg market, which caused the price of those eggs to decline. This example indicates that in a competitive market,

When economists refer to a firm breaking even, they mean that the price the firm receives is high enough that the firm's revenue covers ________. Oil executives frequently use the term "breaking even" in a different way, where the term means that the price of oil is just high enough that the firm's revenue is equal to the ________ of pumping oil from a particular well.

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5. If the market price is $20, what is the amount of the firm's profit?