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.What is the fixed cost of production?

In a graph with output on the horizontal axis and total revenue on the vertical axis,what is the shape of the total revenue curve for a perfectly competitive seller?

Which of the following is the best example of a perfectly competitive firm?

Table 12-4 Table 12-4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units. -Refer to Table 12-4.If the market price is $45,the firm

What is allocative efficiency?

Which of the following statements is true?

In the short run,if price falls below a firm's minimum average total cost,the firm should shut down.

What is meant by the term "long-run competitive equilibrium?

In the long run,a firm in a perfectly competitive industry will supply output only if its total revenue covers its

After an increase in demand in a constant-cost industry,firms will find themselves with higher average cost curves.

Both buyers and sellers are price takers in a perfectly competitive market because

When a perfectly competitive firm finds that its market price is below its minimum average variable cost,it will sell

In a perfectly competitive market the term "price taker" applies to

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry.Table 12-5 shows the firm's cost schedule. Table 12-5 Use the table to answer the following questions. a.Complete Table 12-5 by filling in the blank cells. b.Werner is selling in a perfectly competitive market at a price of $40.What is the profit maximizing or loss-minimizing output? c.Calculate the firm's profit or loss. d.Should the firm continue to produce in the short run? Explain. e.If the firm's fixed costs were $30 higher what would be the profit-maximizing output level in the short run? Indicate whether the output level will increase,decrease or remain unchanged compared to your answer in b. f.Suppose fixed cost remains at $76.If the price of three-ring binders falls to $20 what is the profit-maximizing or loss-minimizing output? g.Calculate the profit or loss.Should the firm continue to produce in the short run? Explain your answer. h. Suppose the fixed cost remains at $76.What price corresponds to the shut-down point? i.Suppose the fixed cost remains at $76.What price corresponds to the break-even point?

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?

Allocative efficiency is achieved in an industry when firms supply those goods and services that provide consumers with a marginal benefit equal to the marginal cost of producing those goods and services.

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 firm's profit-maximizing output?

Figure 12-2 -Refer to Figure 12-2.What is the amount of profit if the firm produces Q₂ units?

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

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