Exam 12: Firms in Perfectly Competitive Markets

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5. If the market price is $20, what is the amount of the firm's profit?

Figure 12-2 -Refer to Figure 12-2. What happens if the firm produces more than Q4 units?

Ethan Nicholas, who developed the iShoot application for the iPhone 3G, found that to maintain sales in a profitable competitive market, the price of a product

To maximize profit, a perfectly competitive firm

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 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-9. At price P1, the firm would produce

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone applications?

Figure 12-16 -Refer to Figure 12-16. 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 non-organic produce to organic produce will add 5 years to the average life span of consumers?

Figure 12-19 -Refer to Figure 12-19. The figure above shows the cost curves of a perfectly competitive firm in the coffee market. Use the graph in Figure 12-19 to answer the following questions. Assume the market price is $3 per pound. a. What is the lowest price at which the coffee grower will supply output in the short run? b. In the diagram draw the firm's demand curve (label this "MR" for marginal revenue). c. What is the firm's profit-maximizing output? d. Is the firm earning a profit or a loss? Identify the area in the graph that represents the firm's profit or loss. e. Explain how entry or exit will occur in the market to ensure that firms will break even in the long run.

The long-run supply curve for a perfectly competitive, constant-cost industry

If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, the firm

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

A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm's short-run profit or loss.

Assuming a market price of $4, fill in the columns in the following table. What is the profit-maximizing level of production? What are the two ways to determine the profit-maximizing level of production?

If a firm's total variable cost exceeds its total revenue, the firm should stop production by shutting down temporarily.

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5. The firm's manager suggests that the firm's goal should be to maximize average profit. In that case, what is the output level and what is the average profit that will achieve the manager's goal?

The delivery of first-class mail by the U.S. Postal Service is an example of

In early 2007, Pioneer and JVC, two Japanese electronics firms, each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets. Which of the following could explain why these firms did not simply raise their prices and increase their profits?

If, as a perfectly competitive industry expands, it can supply larger quantities only at a higher long-run equilibrium price, it is

Figure 12-1 -Refer to Figure 12-1. If the firm is producing 500 units, what is the amount of its profit or loss?