Exam 14: Perfect Competition

At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts.No matter where one went, each vendor was selling these t-shirts for $15 apiece.Which market structure model would best characterize such a situation?

A firm's total revenue is $400 for 8 units of output, $600 for 12 units of output, and $1, 100 for 22 units of output.Evidently this firm is operating in a(n):

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve According to Figure 9.2, the break-even price of the firm is:

At an output level above the profit-maximizing one for a perfectly competitive firm, a reduction in output will:

Under the long-run equilibrium for perfectly competitive markets without any government intervention:

Since a firm is willing to sell its product at the marginal cost and since the firm receives the market price, the difference between the two is:

Given a perfectly competitive market structure at the profit-maximizing output level, a firm's total fixed cost is $15, total variable cost is $137, marginal revenue is $4, and the quantity demanded is 65.The total profit earned by the firm is $108.

Graphically, producer surplus is the area:

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 9.2.If the marginal-revenue curve would have intersected the average-total-cost curve at its lowest point and the firm maximized profit, then total revenue would have been equal to:

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 9.2.Compute the profit earned by the firm at the profit-maximizing level of output.

Under perfect competition, the average revenue curve of the firm coincides with its average cost curve.

If in the short run, at the profit maximizing level of output, the average revenue curve of a competitive firm lies above the average cost curve:

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 9.2.If the marginal-revenue curve would have intersected the average-total-cost curve at the latter's lowest point and the firm maximized profit, then total profit would have been equal to:

One assumption of the model of perfect competition is that entry into the market is easy.This implies that:

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.1 In Figure 9.1, average fixed cost at the profit-maximizing output is equal to ______.