Exam 8: Firms in Perfectly Competitive Markets

In the long run, perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long run they will not earn any profit? __________________________________________________________________________________________________________________________________________________________________________________________

Market supply is found by

Figure 8.1 -Refer to Figure 8.1.If the firm is producing 700 units,

Table 8.1 Table 8.1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units. -Refer to Table 8.1.The firm will not produce in the short run if the output price falls below

A perfectly competitive firm earns a profit when price is

The difference between allocative efficiency and productive efficiency in a perfectly competitive market is

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

In the short run, if price falls below a firm's minimum average total cost, the firm should shut down.

Letters are used to represent the terms used to answer this question: price (P), quantity of output (Q), total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

A perfectly competitive industry achieves allocative efficiency in the long run.Allocative efficiency means

If a firm in a perfectly competitive industry experiences persistent losses, what should it do in the long run?

Figure 8.9 -Refer to Figure 8.9.Suppose the prevailing price is $20 and the firm is currently producing 1350 units.In the long-run equilibrium, the firm represented in the diagram

A perfectly competitive firm's supply curve is its

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

If a perfectly competitive firm raises the price it charges to consumers, which of the following is the most likely outcome?

Marginal revenue is

If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should

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

Figure 8.5 Figure 8.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 8.5.The minimum price the firm requires to produce output is

Assume the market for organically grown produce is perfectly competitive.All else equal, as farmers find it less profitable to produce and sell organic produce in this market,