Exam 7: Firms in Perfectly Competitive Markets

If,in a perfectly competitive industry,the market price facing a firm is below its average total cost but above average variable cost at the output where marginal cost equals marginal revenue,

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

In the short run,a profit-maximising firm will shut down if its total revenue is greater than its variable costs.

Figure 7.1 -Refer to Figure 7.1.If the firm is producing 700 units,the amount of its profit or loss is:

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph? __________________________________________________________________________________________________________________________________________________________________________________________

Both individual buyers and sellers in perfect competition

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

Figure 7.2 -Refer to Figure 7.2.Why is the total revenue curve a ray from the origin?

If,as a perfectly competitive industry expands,it can supply larger quantities at the same long-run market price,it is

Firms in perfect competition are price takers because

Which of the following is not true for a firm in perfect competition?

To maximise profit,a perfectly competitive firm

Under what conditions should a competitive firm shut down in the short run? __________________________________________________________________________________________________________________________________________________________________________________________

Table 7.4 Quantity Average Fixed Cost Average Variable Cost Marginal Cost 20 \ 40 \ 18 \ 18 40 20 14 10 60 13.1 16 20 80 10 22 40 100 8 30 62 120 6.61 40 90 Table 7.4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units. -Refer to Table 7.4.If the market price is $45,how many units will the firm produce?

Productive efficiency is

Figure 7.5 Figure 7.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 7.5.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?

In the short run,a firm might choose to produce rather than shut down even if its market price is less than its average total cost of production.

Figure 7.8 -Refer to Figure 7.8.What does the firm earn at the profit-maximising output level?

Which of the following is a characteristic of a monopoly?