Exam 12: Firms in Perfectly Competitive Markets

A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000.The prevailing market price is $15.What will happen to the number of firms in the industry and to the industry's output in the long run?

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

If total revenue exceeds fixed cost,a firm

Figure 12-6 shows the demand,marginal cost (MC)and average total cost (ATC)curves for Jason's House of Apples. -Refer to Figure 12-6.To maximize his profit,Jason should produce the rate of output indicated by point

Quantity Total Cost (dollars) Variable Cost (dollars) 0 \ 1,000 \ 0 100 1,360 360 200 1,560 560 300 1,960 960 400 2,760 1,760 500 4,000 3,000 600 5,800 4,800 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.If the market price of each camera case is $8,what is the firm's total revenue?

Which of the following is a characteristic of a firm in a perfectly competitive market?

All of the following can be used to compute average profit except

Figure 12-9 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 12-9.At price P2,the firm would

Figure 12-1 -Refer to Figure 12-1.If the firm is producing 500 units

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product,the firm will be able to earn economic profits in the long run.

For a perfectly competitive firm,which of the following is not true at profit maximization?

An increase in a firm's fixed cost will not change the firm's profit-maximizing output in the short run.

The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry. -Refer to Figure 12-17.The graphs depicts a short-run equilibrium.How will this differ from the long-run equilibrium? (Assume this is a constant-cost industry. )

A firm would decide to shut down if its production resulted in

Molly Sharp is producing a documentary about the plight of the six-toed ferrets of Sri Lanka.Molly has spent $125,000 of her own money on this project and the documentary is now complete.Molly just found out that no studio is willing to release her documentary and she must now shop it to cable television networks,where she knows she will not be able to recoup her investment.Which of the following statements regarding Molly Sharp's documentary is true?

How are market price,average revenue,and marginal revenue related for a perfectly competitive firm and why?

Explain two different ways to determine the profit-maximizing level of output for a firm in a perfectly competitive market.

Figure 12-8 -Refer to Figure 12-8.Suppose the firm produces 4,000 units.What does the shaded area labeled A represent?

In the mid-1990s,cattle ranchers in the United States kept raising cattle even though prices were at a ten-year low and below average total cost.What is the likely explanation for this?

Figure 12-7 illustrates the cost curves of a perfectly competitive firm. -Refer to Figure 12-7.If the market price is P2 the firm