Exam 14: Firms in Competitive Markets

Scenario 14-1 Assume a certain firm is producing Q = 1,000 units of output.At Q = 1,000,the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit. -Refer to Scenario 14-1.At Q = 999,the firm's profits equal

Figure 14-8 In the figure below,panel (a)depicts the linear marginal cost of a firm in a competitive market,and panel (b)depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-8.If there are 600 identical firms in this market,what is the value of Q1?

Table 14-6 John's Vineyard -Refer to Table 14-6.What is the total revenue from selling 4 units?

In the long-run equilibrium of a market with free entry and exit,if all firms have the same cost structure,then

If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements,we would expect that

The long-run supply curve for a competitive industry

Describe the difference between average revenue and marginal revenue.Why are both of these revenue measures important to a profit-maximizing firm?

Table 14-8 The following table presents cost and revenue information for Soper's Port Vineyard. -Refer to Table 14-8.What is Soper's Port Vineyard's economic profit at their profit maximizing point?

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Scenario 14-4 A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats.As a result of national press coverage of the report,the demand for irradiated tomatoes increased dramatically.Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost.Assume that the tomato market satisfies all of the assumptions of perfect competition. -Refer to Scenario 14-4.If the increased production of irradiated tomatoes caused a rise in the marginal transportation costs of moving irradiated tomatoes to market,the

When new firms enter a perfectly competitive market,

Figure 14-8 In the figure below,panel (a)depicts the linear marginal cost of a firm in a competitive market,and panel (b)depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-8.If there are 200 identical firms in this market,what level of output will be supplied to the market when price is $2.00?

Firms that operate in perfectly competitive markets try to

Figure 14-5 -Refer to Figure 14-5.Firms will shut down in the short run if the market price

In the short run,a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct?

Suppose a firm is considering producing zero units of output.We call this exiting an industry in the short run and shutting down in the long run.

Which of the following statements is correct regarding a firm's decision-making?

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In long-run equilibrium,market price is determined by

When fixed costs are ignored because they are irrelevant to a business's production decision,they are called