Exam 12: Firms in Perfectly Competitive Markets

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 12-5.If the market price is $20,what is the amount of the firm's profit?

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit,then

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 12-5.The firm's manager suggests that the firm's goal should be to maximize average profit.In that case,what is the output level and what is the average profit that will achieve the manager's goal?

Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market?

The supply curve of a perfectly competitive firm in the short run is

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 12-5.If the market price is $20,what is the firm's profit-maximizing output?

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30,the firm's profit-maximizing output level is

Figure 12-9 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 12-9.At price P4,the firm would produce

Figure 12-19 -Refer to Figure 12-19.The figure above shows the cost curves of a perfectly competitive firm in the coffee market.Use the graph in Figure 12-19 to answer the following questions.Assume the market price is $3 per pound. a.What is the lowest price at which the coffee grower will supply output in the short run? b.In the diagram draw the firm's demand curve (label this "MR" for marginal revenue). c.What is the firm's profit-maximizing output? d.Is the firm earning a profit or a loss? Identify the area in the graph that represents the firm's profit or loss. e.Explain how entry or exit will occur in the market to ensure that firms will break even in the long run.

If a firm shuts down in the short run

If a firm's total variable cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's profit?

Which of the following is not an assumption of perfectly competitive markets?

Assume that price is greater than average variable cost.If a perfectly competitive firm is producing at an output where price is $114 and the marginal cost is $102,then the firm is probably producing more than its profit-maximizing quantity.

A perfectly competitive firm's marginal revenue curve is downward sloping.

If a typical firm in a perfectly competitive industry is incurring losses,then

To maximize profit,a perfectly competitive firm

In a perfectly competitive market the term "price taker" applies to