Exam 12: Firms in Perfectly Competitive Markets

Suppose there are economies of scale in the production of a specialized memory chip that is used in manufacturing microwaves.This suggests that the microwave industry is a decreasing-cost industry.

The market demand curve in a perfectly competitive market is downward sloping.

In the short run,if price falls below a firm's minimum average total cost,the firm should shut down.

Figure 12-11 -Refer to Figure 12-11.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium,the firm represented in the diagram

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

In the short run,a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

Assume the market for cage-free eggs is perfectly competitive.All else equal,as farmers find it less profitable to produce and sell cage-free eggs in this market

Figure 12-13 -Refer to Figure 12-13.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.In the long-run equilibrium

In the long run,perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long-run they will not earn any profit?

What is meant by allocative efficiency? How does a perfectly competitive firm achieve allocative efficiency?

If a perfectly competitive firm achieves productive efficiency then

Which of the following statements is true?

If,for a perfectly competitive firm,price exceeds the marginal cost of production,the firm should

In early 2007,Pioneer and JVC,two Japanese electronics firms,each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets.Which of the following could explain why these firms did not simply raise their prices and increase their profits?

If the market price is $40,the average revenue of selling five units is

What is the relationship among the following variables for a perfectly competitive firm: the market price,average revenue and marginal revenue?

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21.Which of the following will happen?

If a firm shuts down it

In a graph that illustrates a perfectly competitive firm,marginal revenue is

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm