Exam 12: Firms in Perfectly Competitive Markets

Table 12-1 Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 12-1.The firm will not produce in the short run if the output price falls below

Figure 12-14 -Refer to Figure 12-14.Consider a typical firm in a perfectly competitive industry which is incurring short-run losses.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

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

If the long-run average cost curve is U-shaped,the optimal scale of production from society's viewpoint is

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

New York Times writer Michael Lewis wrote that "The sad truth,for investors,seems to be that most of the benefits....are passed through to consumers free of charge." To which of the following did Lewis refer?

Assume that firms in a perfectly competitive market are earning economic profits.Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?

At the profit-maximizing level of output for a perfectly competitive firm

Under what conditions should a competitive firm shut down in the short run?

Firms that are price takers

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 price is equal to average variable cost,a perfectly competitive firm breaks even.

Figure 12-17 The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry. -Refer to Figure 12-17.Which of the following statements is true?

The minimum point on the average variable cost curve is called the loss-minimizing point.

Which of the following characteristics of a farmers' market make it a good example of a perfectly competitive market?

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

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

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

The short-run supply curve for a perfectly competitive firm is that part of the firm's marginal cost curve that lies above the minimum point of its average variable cost curve.

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?