Exam 12: Firms in Perfectly Competitive Markets

Figure 12-9 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 12-9.Identify the short-run shut down point for the firm.

Writing in the New York Times on the technology boom of the late 1990s,Michael Lewis argues,"The sad truth,for investors,seems to be that most of the benefits of new technologies are passed right through to consumers free of charge." What does Lewis means by the benefits of new technology being "passed right through to consumers free of charge"?

A perfectly competitive firm faces a demand curve that 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.The figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens to its profit-maximizing output level?

If the market price is $40 in a perfectly competitive market,the marginal revenue from selling the fifth unit is

Figure 12-16 -Refer to Figure 12-16.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

In a perfectly competitive industry,in the long-run equilibrium

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

Which of the following is not a characteristic of a monopolistically competitive market structure?

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.The firm will not produce in the short run if the output price falls below

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

Allocative efficiency is achieved in an industry when firms supply those goods and services that provide consumers with a marginal benefit equal to the marginal cost of producing those goods and services.

Fill in the columns in the following table and use the values in the table to determine the profit-maximizing level of output. Quantity Total Revenue ( ) Total Cost ( ) Profit Marginal Revenue ( ) Marginal Cost (MC) 0 0 3 1 5 5 2 10 6 3 15 8 4 20 11 5 25 15 6 30 21 7 35 30 8 40 42 9 45 60 10 50 85

If price is equal to average variable cost,a perfectly competitive firm breaks even.

Assuming a market price of $4,fill in the columns in the following table.What is the profit-maximizing level of production? What are the two ways to determine the profit-maximizing level of production? Quntity Total Revenue (TR) Total Cost (TC) Profit Marginal Revenue ( ) Marginal Cost (MC) 0 3 1 5 2 6 3 9 4 14 5 20 6 28 7 40

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.What is the amount of its total fixed cost?

Assume that firms in a perfectly competitive market are earning economic profits.Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?

The minimum point on the average variable cost curve is called the loss-minimizing point.

Figure 12-7 illustrates the cost curves of a perfectly competitive firm. -Refer to Figure 12-7.If the market price is P3 the firm

Figure 12-1 -Refer to Figure 12-1.If the firm is producing 200 units