Exam 9: Firms in Perfectly Competitive Markets

Table 9-1 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 9-1 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 9-1.What is the fixed cost of production?

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's profit?

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

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21.Which of the following will happen?

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows: Output per Day Total Cost 0 \ 20 1 32 2 37 3 48 4 61 5 75 6 92 7 113 8 136 Suppose the current equilibrium price in the teapot market is $20.To maximize profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

A constant cost,perfectly competitive market is in long-run equilibrium.At present,there are 1,000 firms each producing 400 units of output.The price of the good is $60.Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $64.In the new long-run equilibrium,how will the average total cost of producing the good compare to what it was before the price of the good rose?

Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market?

Producing where marginal revenue equals marginal cost is equivalent to producing where

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 500 units

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 500 units,what is the amount of its profit or loss?

The supply curve of a perfectly competitive firm in the short run is

A perfectly competitive firm's marginal revenue

Figure 9-6 Figure 9-6 shows the demand, marginal cost (MC)and average total cost (ATC)curves for Jason's House of Apples. -Refer to Figure 9-6.To maximize his profit,Jason should produce the rate of output indicated by point

Figure 9-16 -Refer to Figure 9-16.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

Table 9-3 Quantity Total Cost Average Total Cost Marginal Cost 0 \ 10.00 \@cdots \@cdots 1 15.00 \ 15.00 \ 5.00 2 17.50 8.75 2.50 3 22.50 7.50 5.00 4 30.00 7.50 7.50 5 40.00 8.00 10.00 6 52.50 8.75 12.50 7 67.50 9.64 15.00 8 85.00 10.63 17.50 9 105.00 11.67 20.00 Arnie sells basketballs in a perfectly competitive market.Table 9-3 summarizes Arnie's output per day (Q), total cost (TC), average total cost (ATC)and marginal cost (MC). -Refer to Table 9-3.What price (P)will Arnie charge and how much profit will he earn if the market price of basketballs is $12.50?

Both individual buyers and sellers in perfect competition

Figure 9-9 Figure 9-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 9-9.At price P₃,the firm would

Figure 9-3 -Refer to Figure 9-3.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.Identify the area that represents the loss.

Figure 9-2 -Refer to Figure 9-2.What is the amount of profit if the firm produces Q₂ units?

A perfectly competitive firm faces a demand curve that is