Exam 12: Perfect Competition

Suppose that the market in which bakeries compete is a perfectly competitive market. Which one of the following reasons does not explain why it is difficult for a bakery to make an economic profit in the long run?

The maximum loss a firm will experience in the short run equals

Use the figure below to answer the following question. Figure 12.3.4 -Refer to Figure 12.3.4, which shows cost curves of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $12 a frame. Paul produces ________ frames each week and makes ________ total revenue.

Use the information below to answer the following questions. Fact 12.2.1 Chevy Volt Production Temporarily Shut Down GM will temporarily lay off 1,300 employees as the company stops production of the electric car, Chevy Volt, for five weeks. GM had hoped to sell 10,000 Volts last year, but ended up selling just 7,671. It plans to maintain inventory levels by adjusting production to match demand. Source: Politico, March 2, 2012 -Refer to Fact 12.2.1. The shutdown decision maximizes GM's economic profit (or minimizes its loss)when price is less than

A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.

In the short run, a firm in a perfectly competitive market

A decrease in demand brings all of the following except

Use the information below to answer the following questions. Fact 12.4.2 Exxon Mobil Selling All Its Retail Gas Stations Exxon Mobil is not alone among Big Oil exiting the retail gas business, a market where profits have gotten tougher as crude oil prices have risen. Gas station owners say they're struggling to turn a profit because while wholesale gasoline prices have risen sharply, they've been unable to raise pump prices fast enough to keep pace. Source: Houston Chronicle, June 12, 2008 -Refer to Fact 12.4.2. Exxon Mobil's decision will ________ economic profit of other gasoline retailers, everything else remaining the same.

Use the figure below to answer the following questions. Figure 12.4.1 -Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, market

Use the table below to answer the following questions. Table 12.2.1 -Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. Economic profit is maximized when the firm produces ________ units of output.

Use the table below to answer the following questions. Table 12.2.2 -Refer to Table 12.2.2, which gives the total cost schedule for Chip's Pizza Palace, a perfectly competitive firm. If Chip shuts down in the short run, his total cost is

Use the table below to answer the following questions. Table 12.2.5 -Refer to Table 12.2.5. Archibald's Tattoos is a perfectly competitive firm. The firm's total costs are shown in the table. If the price of a tattoo is $12.50, Archibald's economic profit is

A technological advance occurs in a perfectly competitive market. Which of the following statements is incorrect?

Use the table below to answer the following questions. Table 12.1.1 -Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm. If the firm sells 6 units of output, marginal revenue is

A firm will shut down temporarily when the price is so low that total revenue is insufficient to cover the

When a perfectly competitive market is in long-run equilibrium,

In which one of the following situations will a perfectly competitive firm incur an economic loss?

Lin's fortune cookies are identical to the fortune cookies made by dozens of other firms, and there is free entry in the fortune cookie market. Buyers and sellers are well informed about prices. The price of a fortune cookie is determined by ________. The marginal revenue of a fortune cookie equals ________.

Long-run equilibrium occurs in a competitive market when

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's total revenue from the sale of donuts is $12,000 a year. Homer's costs are $16,000 in annual rental payments for its five-year lease on its store and $5,000 for ingredients. Should Homer's exit the market in the long run?