Exam 13: Firms in Competitive Markets

Firms in a competitive market are said to be price takers because there are many sellers in the market, and the goods offered by the firms are very similar if not identical.

For a firm in a competitive market, an increase in the quantity produced by the firm will result in

Table 14-12 -Refer to Table 14-12. What is the total revenue from selling 7 units?

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm should not produce an output level beyond

Scenario 14-5 A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats. As a result of national press coverage of the report, the demand for irradiated tomatoes increased dramatically. Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost. Assume that the tomato market satisfies all of the assumptions of perfect competition. -Refer to Scenario 14-5. As a result of the increase in the demand for tomatoes, we would predict that in the short run that the

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal cost is equal to

When economic profits are zero in equilibrium, the firm's revenue must be sufficient to cover all opportunity costs.

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: -Refer to Figure 14-13. If the price is $2 in the short run, what will happen in the long run?

Mrs. Smith is operating a firm in a competitive market. The market price is $6.50. At her profit-maximizing level of output, her average total cost of production is $7.00, and her average variable cost of production is $6.00. Which of the following statements about Mrs. Smith's firm is correct?

If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market.

A seller in a competitive market can

Why does a firm in a competitive industry charge the market price?

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

The analysis of competitive firms sheds light on the decisions that lie behind the

In a market with 1,000 identical firms, the short-run market supply is the

A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price falls to $18, and the firm makes whatever adjustments are necessary to maximize its profit at the now-lower price. Once the firm has adjusted, its

Which of the following firms is the closest to being a perfectly competitive firm?

For a firm operating in a competitive market, both marginal revenue and average revenue exceed the market price.

Figure 14-9 In the figure below, panel a) depicts the linear marginal cost of a firm in a competitive market, and panel b) depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-9. If there are 600 identical firms in this market, what is the value of Q1?