Exam 11: Costs and Profit Maximization Under Competition

The demand curve for oil from OPEC is:

Total cost equals the sum of fixed costs and average costs.

The _____ industry in Dalton, Georgia, provides an example of a decreasing cost industry.

(P - AC) × Q =

The market for designer jeans is a good example of a perfectly competitive market.

When deciding on the profit maximizing level of output, firms compare ______ of an additional unit of output to the ______.

Use the following to answer questions: Figure: Industry Firms -(Figure: Industry Firms) Use the figures. The market for a normal good is characterized by demand curve D₂ and supply curve S₂. A decrease in income will cause:

When opportunity cost is positive, economic profit ______ accounting profit.

Figure: Increasing Costs Refer to the figure. If an industry consists of two firms, Firm 1 and Firm 2, as shown in the diagram, what is the industry's quantity supplied at a price of $7 and $9?

In a highly competitive industry, demand for a firm's product is:

A firm should exit an industry if:

In a decreasing industry:

Suppose there is a large and permanent increase in the demand for a good produced in a competitive industry. We should expect that:

In a competitive equilibrium, firms earn ______ economic profits.

Table: Profit Maximization 2 The firm in this table can earn a maximum profit of ______, which occurs at an output of ______ barrels per day.

The supply curve for oil slopes upward because additional quantities of oil can only be produced at higher cost.

Which of the following is an example of an implicit cost of production?

Table: Cucumbers Use the table. Suppose that the market price per cucumber is $0.80. What is the marginal revenue of producing 100 cucumbers? What happens to total cost if cucumber production rises from 500 to 600? What is the profit-maximizing quantity of cucumbers?

Economists call the time after all exit or entry has occurred:

Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day which reflects Julius' increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?