Exam 8: Firms in Perfectly Compitive Markets

A perfectly competitive firm in a constant-cost industry produces 3000 units of a good at a total cost of $36 000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry's output in the long run?

-Refer to Figure 8-13. Suppose a typical firm in a perfectly competitive market is earning economic profits in the short run. Which of the diagrams in the figure depicts what happens in the industry as it transitions to a long-run equilibrium?

-Refer to Figure 8-14. Which panel best represents the perfectly competitive organic produce market in which some firms are earning short-run economic profits, and the Surgeon General announces that switching from nonorganic produce to organic produce will add 5 years to the average life span of consumers?

Apple introduced its iPhone 3G in July 2008, and within a month sales had topped 3 million units. By April 2009, more than 25 000 apps for the iPhone 3G were available in the iTunes store, an indication that in a competitive market,

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

-Refer to Table 8-1. If the market price of each camera case is $8, what is the profit-maximising quantity?

-Refer to Figure 8-8. Total revenue at the profit-maximising level of output is

-Refer to Figure 8-4. If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss?

A perfectly competitive firm's marginal revenue

Marty's Bird House suffers a short-run loss. Marty can reduce his loss below the amount of his total fixed costs by continuing to produce if his revenue

In long-run perfectly competitive equilibrium, which of the following is false?

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

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

The short-run supply curve for a perfectly competitive firm is that part of the firm's marginal cost curve that lies above the minimum point of its average variable cost curve.

In the long run, a perfectly competitive market will

-Refer to Figure 8-2. What happens if the firm produces more than Q₄ units?

-Refer to Figure 8-12. Consider a typical firm in a perfectly competitive industry which is incurring short-run losses. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

-Refer to Figure 8-7. Identify the firm's short-run supply curve.

In the short run, if a firm shuts down its maximum loss equals the amount of its fixed cost.

-Refer to Figure 8-1. If the firm is producing 700 units, what is the amount of its profit or loss?