Exam 10: The Firm and the Industry Under Perfect Competition

Richard Bland quit his job as an accounting professor to start his own restaurant.He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment.In the restaurant's first year it had direct expenses of $75,000 and revenues of $150,000.The restaurant's economic profit was

What is the relationship between the long-run industry supply curve and the short-run supply curve in a perfectly competitive market?

If you must determine the long-run equilibrium output of a perfectly competitive firm and you are permitted to see only one curve, which of the following curves is most helpful?

The long run for the industry is defined as a period of time long enough for

What is the difference between the short run and the long run as economists define the two?

If a firm shuts down, its

When a firm leaves a perfectly competitive industry,

In perfect competition, an increase in fixed costs will eventually cause all except

Figure 10-3 -In Figure 10-3, the profit maximizing firm will operate at a level of

Table 10-2   -Refer to Table 10-2.Which firm is better off staying in business in the short run?

We don't need to draw separate curves for demand, average revenue, and marginal revenue curves for a perfectly competitive firm.Why?

Under perfect competition, firms are relatively ignorant of the actions of their competitors.