Exam 9: Firms in Perfectly Competitive Markets

A perfectly competitive market is in long-run equilibrium.At present there are 100 identical firms each producing 5,000 units of output.The prevailing market price is $20.Assume that each firm faces increasing marginal cost.Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $24.Which of the following describes the effect of this increase in demand on a typical firm in the industry?

Figure 9-9 Figure 9-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 9-9.If the firm chose to produce at price P₁,the firm would

If a typical firm in a perfectly competitive industry is incurring losses,then

If total revenue exceeds fixed cost,a firm

What is meant by the term "long-run competitive equilibrium?

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.

Writing in the New York Times on the technology boom of the late 1990s,Michael Lewis argues,"The sad truth,for investors,seems to be that most of the benefits of new technologies are passed right through to consumers free of charge." What does Lewis means by the benefits of new technology being "passed right through to consumers free of charge"?

Table 9-4 Quantity Average Fixed Cost Average Variable Cost Marginal Cost 20 \ 40 \ 18 \ 18 40 20 14 10 60 13.1 16 20 80 10 22 40 100 8 30 62 120 6.61 40 90 Table 9-4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units. -Refer to Table 9-4.If the market price is $45,the firm

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

A perfectly competitive wheat farmer in a constant-cost industry produces 1,000 bushels of wheat at a total cost of $50,000.The prevailing market price is $48.What will happen to the market price of wheat in the long run?

If a firm shuts down in the short run,it avoids its variable cost but not its fixed cost.

If a perfectly competitive firm's total revenue is less than its total variable cost,the firm

If firms do not earn economic profits in a competitive equilibrium,then why would the firms choose to stay in business?

Assume that the 4K and OLED television sets industry is perfectly competitive.Suppose a producer develops a successful innovation that enables it to lower its cost of production.What happens in the short run and in the long run?

Which of the following arguments could be made as evidence that the market for cage-free eggs is perfectly competitive?

Table 9-2 Apples (pounds) MarketPrice per Pound Total Revenue ( TR) Average Revenue (AR) Marginal Revenue (MIR) 0 \ 3 \ 0 \@cdots \@cdots 100 150 200 250 300 350 400 Table 9-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. -Refer to Table 9-2.What is Margie's total revenue if she sells 250 pounds of apples?

Assume that the market for cage-free eggs is perfectly competitive.All else equal,as more farmers choose to produce and sell cage-free eggs,what is likely to happen to the equilibrium price of the eggs and profits of these farmers in the long run?