Exam 7: Firms in Perfectly Competitive Markets

Figure 7.11 -Refer to Figure 7.11.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

Figure 7.8 -Refer to Figure 7.8.What is total cost at the profit-maximising output level?

An individual seller in perfect competition will not sell at a price lower than the market price because

Figure 7.7 Figure 7.7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7.7.At price P₃,the firm would produce

A constant-cost industry is an industry in which

Consider the market for wheat which is a perfectly competitive market.Is the market demand curve the same as the demand curve facing an individual producer? If not,explain how and why they are different.Illustrate your answer graphically. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 7.14 -Refer to Figure 7.14.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

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.If the market price is $20,the amount of the firm's profit is -.

Ben's Peanut Shoppe suffers a short-run loss.Ben will not choose to shut down if

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

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.If the market price is $20,the average profit at the profit-maximising quantity is -.

At the profit-maximising level of output for a perfectly competitive firm,price equals marginal cost.Which of the following is also true?

Assume that price is greater than average variable cost.If a perfectly competitive firm is producing at an output where price is $114 and the marginal cost is $102,then the firm is probably producing more than its profit-maximising quantity.

If in the long run a firm makes zero profit,it should exit the industry.

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

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

A teenaged babysitter is similar to a firm in a perfectly competitive industry in that,for both,

A perfectly competitive firm has to charge the same price as every other firm in the market.Therefore,the firm

A perfectly competitive firm in a constant-cost industry produces 1000 units of a good at a total cost of $50 000.If the prevailing market price is $48,the number of firms and the industry's output will decrease in the long run.

In a decreasing-cost industry,the entry of new firms lowers average cost at each level of output.