Exam 7: Firms in Perfectly Competitive Markets

Jason,a high-school student,mows lawns for families in his neighbourhood.The going rate is $12 for each lawn-mowing service.Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service.If the market for lawn mowing services were perfectly competitive,what would happen if Jason raised his price?

Why is the demand curve for each seller's product in perfect competition horizontal at the market price?

A perfectly competitive apple farm produces 1000 bushels of apples at a total cost of $36 000.The price of each bushel is $50.The firm's short-run profit or loss is

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

What does an industry's long-run supply curve show?

Marginal revenue is

A perfectly competitive firm in a constant-cost industry produces 1000 units of a good at a total cost of $50 000.The prevailing market price is $48.Assuming that this firm continues to produce in the long run,what happens to output level in the long run?

A firm could continue to operate for years without ever earning a profit as long as it is producing an output where

What is allocative efficiency?

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

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,to maximise its profit,the farm should

Use a graph to show the demand,AVC,ATC,MC,and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph. __________________________________________________________________________________________________________________________________________________________________________________________

For a firm in a perfectly competitive market,price is

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

For a perfectly competitive firm,to what is average revenue equal?

If the market price is $25,what is the average revenue of selling five units?

Figure 7.7 Figure 7.7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7.7.Identify the short-run shut down point for the firm.

Which of the following is not a characteristic of a perfectly competitive market structure?

For a perfectly competitive firm,which of the following is not true at profit maximisation?

In the long run,a perfectly competitive market will