Exam 12: Firms in Perfectly Competitive Markets

Figure 12-6 Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-6.At price P₂,the firm would produce

An industry's long-run supply curve shows

Both individual buyers and sellers in perfect competition

If a perfectly competitive firm's price is less than its average total cost but greater than its average variable cost,the firm

In the short run,if a firm shuts down it avoids its variable cost but not its fixed cost.

All of the following can be used to compute average profit except

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

Assume the market for organic produce sold at farmers' markets is perfectly competitive.All else equal,as more farmers choose to produce and sell organic produce at farmers' markets,what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?

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

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

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

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?

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

A perfectly competitive wheat farmer in a constant-cost industry produces 1,000 bushels of wheat at a total cost of $50,000.The prevailing market price is $48.What will happen to the market price of wheat in the long run?

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?

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 figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens to its profit-maximizing output level?

Figure 12-2 -Refer to Figure 12-2.Why is the total revenue curve a ray from the origin?

A perfectly competitive firm breaks even at a price equal to its minimum average total cost.

Assume that the LCD and plasma television sets industry is perfectly competitive.Suppose a producer develops a successful innovation that enables it to lower its cost of production.What happens in the short run and in the long run?

Maximizing average profit is equivalent to maximizing total profit.