Exam 12: Firms in Perfectly Competitive Markets

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.If the prevailing market price is $48, the number of firms and the industry's output will decrease in the long run.

Jason, a high-school student, mows lawns for families in his neighborhood.The going rate is $12 for each lawn-mowing service.Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service.If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?

A perfectly competitive firm has to charge the same price as every other firm in the market.Therefore, the firm

A perfectly competitive firm faces a demand curve that is

A perfectly competitive firm earns a profit when price is

Figure 12-5 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 firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?

What is always true at the quantity where a firm's average total cost equals average revenue?

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Figure 12-8 -Refer to Figure 12-8.Suppose the firm produces 4,000 units.What does the shaded area labeled B represent?

Figure 12-17 The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry. -Refer to Figure 12-17.The graphs depicts a short-run equilibrium.How will this differ from the long-run equilibrium? (Assume this is a constant-cost industry.)

Consider the market for wheat which is a perfectly competitive market.Is the market demand curve the same as the demand curve facing an individual producer? If not, explain how and why they are different? Illustrate your answer graphically.

Figure 12-8 -Refer to Figure 12-8.Suppose the market price is $120.Which of the following is true?

At the profit-maximizing level of output for a perfectly competitive firm

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

To maximize profit, a firm will produce the level of output where MR = MC.If a firm actually makes a profit depends on the relationship of price to average total cost.What are the three possible relationships between price and average total cost that determine if a firm will make a profit, experience a loss, or break even?

Profit is the difference between