Exam 23: Perfect Competition

-Refer to the above figure. The figure represents the market demand and supply curves for widgets. What statement can be made about the demand curve for an individual firm in this market?

With marginal cost pricing,

-In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm total revenue is

"A firm should shut down immediately when it earns zero economic profits." Do you agree or disagree? Explain your answer.

What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?

Which of the following conditions is TRUE for a profit-maximizing firm in a perfectly competitive industry?

A perfectly competitive market has

If the wage rate increases and firms in a perfectly competitive industry are hiring labor, then

For a perfectly competitive firm, when MC is less than MR,

Perfectly competitive markets are efficient because

A firm should continue producing until

The opportunity cost to society of producing one more unit of the good is

What is always true about the short-run equilibrium position for a firm in perfect competition?

Under perfect competition, the firm must decide

If the long-run supply curve is upward sloping, we know that

"A market is said to be perfectly competitive when consumers can tell that some products are of better quality than others." Do you agree or disagree? Why?

The difference between price and average total cost is

An increasing-cost industry will have

In the long run, the price for a perfectly competitive firm

The rate of production that maximizes the positive difference between total revenues and total costs is the