Exam 7: Firms in Competitive Markets

Assume a perfectly competitive firm sells its output for $150 per unit.At its current 2,000 units of output, marginal cost is $140 and increasing, and average variable cost is $143.Assuming it wants to maximize its profits, it should:

Assume that all of the inputs used in a particular perfectly competitive industry can be increased without bidding up their prices.The long run supply curve for that industry will be:

Figure 7-E -Refer to Figure 7-E.What would be the area of total cost if the firm maximized profits/minimized losses?

Which of the following is true about perfect competition?

Which of the following is a characteristic of perfect competition?

Which of the following is a characteristic of perfect competition?

A profit-maximizing firm in a perfectly competitive market will always produce a quantity of output that:

Assume you know the following short run information for a perfectly competitive firm: Quantity 6 7 8 9 10 11 Price 10 Total Marginal Revenue Revenue Total Cost 30 51 62 75 90 Marginal Total Cost Profil 30 35 42 Based on the information above, which of the following is true?

In long-run equilibrium, the perfectly competitive firm produces:

In the long run, a perfectly competitive firm is expected to generate either an economic profit or an economic loss.

A firm facing a horizontal demand curve:

Table 7-B The long-run total cost schedule of a perfectly competitive firm that produces walnuts is as follows: Pounds of 1,000 2,000 3,000 4,000 5,000 6,000 Walnuts Total Cost \3 ,000 \5 ,500 \7 ,500 \8 ,000 \1 1,000 \1 5,000 -Refer to Table 7-B.The average total cost of producing 2,000 pounds of walnuts in the long run is:

Which market structure is characterized by many sellers, easy entry, and homogeneous products?

In a perfectly competitive market, producers efficiently use their scarce resources to produce what consumers want, in order to achieve:

In order to maximize profits, a firm should produce the level of output at which total revenue is maximized.

Beginning from a long run equilibrium in a competitive industry, if there is a substantial, permanent increase in demand for industry output:

If the long-run industry supply curve in a perfectly competitive market is horizontal, then very likely input prices will ____ as industry output expands.

Figure 7-F The figure shows the price, marginal cost, and average cost curves of a perfectly competitive firm. -Refer to Figure 7-F.What is the profit earned each day by a profit-maximizing (loss-minimizing) firm?

If input prices rise as industry output expands, then a perfectly competitive firm's marginal cost and average cost curves will:

At the level of output where marginal revenue equals marginal cost, price is less than average total cost but greater than average variable cost.In this instance, a profit-maximizing firm should: