Exam 10: Perfect Competition

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1 -Suppose a perfectly competitive firm's total revenue is equal to $210 and its output is 70 units, when its marginal-cost curve intersects the marginal-revenue curve. What is the marginal revenue earned by the firm?

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5 MC: Marginal cost curve MR: Marginal revenue curve.ATC: Average-total-cost curve AVC: Average-variable-cost curve -Why do the perfectly competitive firms earn only normal profits in the long run?

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -If significant barriers to entry exist in a market, then the market is best described through the model of perfect competition.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -An individual firm in perfect competition can exercise a significant control over the market price of the good.

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5 MC: Marginal cost curve MR: Marginal revenue curve.ATC: Average-total-cost curve AVC: Average-variable-cost curve -An individual perfectly competitive firm's supply curve is its:

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5 MC: Marginal cost curve MR: Marginal revenue curve.ATC: Average-total-cost curve AVC: Average-variable-cost curve -Assume the price facing the firm in Figure 10.5 is P_1.Which of the following statements is true?

Scenario 9.2 Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments. -Quickie Inc., a perfectly competitive firm, currently maximizes profit by producing 400 units of output. If its marginal cost is equal to $25 and its average total cost is $20, then how much is it earning in economic profit?

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1 -A perfectly competitive firm produces 50 units of output, at equilibrium, in the short run. The total cost borne by the firm is $300 and the average revenue is $2. Therefore, the firm:

The figure given below shows the revenue and the cost curves of a perfectly competitive firm.Figure 10.3 -In Figure 10.3, at equilibrium, the firm enjoys a profit of:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -A firm's break-even price is the price that is just equal to the minimum point of the AVC curve, in the short run.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -The governmental interference with the market exchange often reduces the total surplus.

Scenario 9.2 Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments. -If an individual firm in a market is a price taker, then:

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5 MC: Marginal cost curve MR: Marginal revenue curve.ATC: Average-total-cost curve AVC: Average-variable-cost curve -The permanent shut down point of a perfectly competitive firm, in the long run, is:

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1 -At an output level above the profit-maximizing level, for a perfectly competitive firm, a reduction in output will:

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5 MC: Marginal cost curve MR: Marginal revenue curve.ATC: Average-total-cost curve AVC: Average-variable-cost curve -What causes the market supply curve to shift rightward?

Scenario 9.2 Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments. -At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts. No matter where one went, each vendor was selling these t-shirts for $15 a piece. Which market structure model would best characterize such a situation?

Scenario 9.2 Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments. -The market-demand curve for a product in a perfectly competitive market:

The figure given below shows the demand and cost curves of a perfectly competitive firm.Figure: 10.4 D: Demand curve MC: Marginal cost curve ATC: Average-total cost curve AVC: Average-variable-cost curve -Suppose a firm in a perfectly competitive market is operating at its profit-maximizing level of output. Will the firm suspend operations if it faces a reduction in the price it can charge for its product?

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -Under long-run equilibrium in perfect competition, each firm operates at the minimum point of its average-variable-cost curve.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -In the long-run, a perfectly competitive firm will leave the market if it is unable to cover all of its fixed costs.