Exam 10: Firms in Perfectly Competitive Markets

Use a graph to show the demand, AVC, ATC, MC, and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph.

Max Shreck, an accountant, quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner, Mary Pickford.The lease has five years remaining and requires a monthly payment of $4,000.The lease

Figure 10.5 Figure 10.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 10.5.What is the minimum price the firm requires to produce output?

Figure 10.9 -Refer to Figure 10.9.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.If the firm represented in the diagram continues to stay in business, in the long-run equilibrium,

A perfectly competitive firm's supply curve is its

A very large number of small sellers who sell identical products imply

Under what conditions should a competitive firm shut down in the short run?

A decrease in demand for organic products will ________ a firm's economic profit, and the increase in costs to produce organic produce will ________ a firm's economic profit.

An individual seller in perfect competition will not sell at a price lower than the market price because

Figure 10.3 -Refer to Figure 10.3.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.Identify the area that represents the loss.

An increase in a firm's fixed cost will not change the firm's profit-maximizing output in the short run.

In the short run, a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing it, the firm

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

Table 10.1 Quantity Total Cost (dollars) Variable Cost (dollars) 0 \ 1,000 \ 0 100 1,360 360 200 1,560 560 300 1,960 960 400 2,760 1,760 500 4,000 3,000 600 5,800 4,800 Table 10.1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 10.1.If the market price of each camera case is $8, what is the firm's total revenue?

Figure 10.13 -Refer to Figure 10.13.If the market price is P₁, what is the allocatively efficient output level?

The minimum point on the average variable cost curve is called the loss-minimizing point.

Figure 10.6 Figure 10.6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 10.6.Identify the short-run shut down point for the firm.

Table 10.1 Quantity Total Cost (dollars) Variable Cost (dollars) 0 \ 1,000 \ 0 100 1,360 360 200 1,560 560 300 1,960 960 400 2,760 1,760 500 4,000 3,000 600 5,800 4,800 Table 10.1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 10.1.If the market price of each camera case is $8, what is the profit-maximizing quantity?