Exam 8: Firms in Perfectly Competitive Markets

Firms in perfect competition produce the productively efficient output level in the short run and in the long run.

Figure 8.6 -Refer to Figure 8.6.Suppose the firm produces 4000 units. The shaded area labelled A represents

Competition has driven the economic profits in the video rental business to zero.Surya Bacha, who owns a video rental business, would be better off leaving the industry for another alternative.

What is the relationship among the following variables for a perfectly competitive firm: the market price, average revenue and marginal revenue?

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

In early 2007, Pioneer and JVC, two Japanese electronics firms, each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets.Which of the following could explain why these firms did not simply raise their prices and increase their profits?

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 fixed cost of production is

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 firm's manager suggests that the firm's goal should be to maximise average profit.In that case, what is the output level and what is the average profit that will achieve the manager's goal?

To what does the term 'price taker' apply in a perfectly competitive market?

Figure 8.8 -Refer to Figure 8.8.The firm's short-run supply curve is its

Figure 8.14 -Refer to Figure 8.14.Which panel best represents the perfectly competitive organic produce market in which organic produce is considered a normal good, and the average income level of consumers is rising?

To maximise profit, a firm will produce the level of output where MR = MC.If a firm actually makes a profit depends on the relationship of price to average total cost.What are the three possible relationships between price and average total cost that determine if a firm will make a profit, experience a loss, or break even? __________________________________________________________________________________________________________________________________________________________________________________________

What demand curve is faced by a perfectly competitive firm?

What is meant by productive efficiency? How does a perfectly competitive firm achieve productive efficiency? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 8.6 -Refer to Figure 8.6.Suppose the firm produces 4000 units. The shaded area labelled B represents

If a firm shuts down it

Mark Frost grows apples in a perfectly competitive market.If we drew a line in a graph that illustrates Mark's total revenue from selling apples, it would be

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

What is the minimum point on the average variable cost curve called?

What is the difference between 'shutting down temporarily' and 'exiting the industry'? __________________________________________________________________________________________________________________________________________________________________________________________