Exam 11: Costs and Profit Maximization Under Competition

Use the following to answer questions: Figure: Costs of Oil Production -(Figure: Costs of Oil Production) Refer to the figure. Assuming that price equals marginal cost, the total cost of producing eight barrels of oil is:

The decision to enter or exit an industry is based:

When a firm expands output from 10 to 11 units and total revenue increases from $100 to $110, marginal revenue of the eleventh unit is:

In a competitive, constant cost industry:

In a perfectly competitive market, sellers who set their price above the market price will sell nothing.

Marginal cost is:

Use the following to answer questions : Figure: Profits and Competitive Firms -(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making an economic loss?

In Texas, what does the term nodding donkey mean?

Use the following to answer questions: Figure: Industry Firms -(Figure: Industry Firms) Refer to the figures. The market is characterized by demand curve D₂ and supply curve S₁. The firms in the industry are earning ________, which will cause the______________.

The total amount of money that a firm receives from sales of its output is called:

A firm will continue to produce additional output, as long as marginal revenue is greater than marginal cost.

Restaurants in tourists areas will close during the off-season if their:

Which of the following is TRUE?

Which statement about cost is correct?

Perfectly competitive firms produce at the quantity where marginal revenue ______ marginal cost.

Economists study decreasing cost industries in order to explain:

Figure: Pineapples 2 Refer to the figure. In the long run, what do you expect this firm's economic profit or loss to be?

Profit = (P - MC) × Q.

When the level of production is relatively low, the average cost per unit of output would ________ if output increased.

If firms in a competitive market are earning above-normal profits, the elimination principle states that new firms will enter the market and drive profits to normal.