Exam 9: Firms in Perfectly Competitive Markets

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

If in the long run a firm makes zero economic profit,it should exit the industry.

If,as a perfectly competitive industry expands,it can supply larger quantities only at a higher long-run equilibrium price,it is

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

How are market price,average revenue,and marginal revenue related for a perfectly competitive firm and why?

A perfectly competitive firm's marginal revenue curve is downward sloping.

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

Assume that a perfectly competitive market is in long-run equilibrium.Suppose as a result of a health hazard associated with the industry's product,demand decreases drastically.What is the immediate result of this event?

The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.

Which of the following is the best example of a perfectly competitive industry?

Figure 9-16 -Refer to Figure 9-16.Which panel best represents the perfectly competitive organic produce market in which firms are breaking even,economically,organic produce is considered a normal good,and the average income level of consumers is rising?

Which of the following is a characteristic of a monopoly?

Figure 9-12 -Refer to Figure 9-12.Consider a typical firm in a perfectly competitive industry that makes short-run profits.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

In a decreasing-cost industry,the entry of new firms lowers average cost at each level of output.

Figure 9-15 -Refer to Figure 9-15.Assume that the medical screening industry is perfectly competitive and that some firms are making short-run losses.Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health.Which of the diagrams in the figure best describes what happens in the industry?

If a firm shuts down in the short run

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 P₄,the firm would produce

A perfectly competitive firm earns a profit when price is

Which of the following describes a situation in which a good or service is produced at the lowest possible cost?

Max Shreck,an accountant,quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner,Sylvia Sidney.The lease has five years remaining and requires a monthly payment of $4,000.Max's explicit cost amounts to $3,000 per month more than his revenue.Should Max continue operating his business?