Exam 14: Firms in Competitive Markets

Figure 14-12 -Refer to Figure 14-12. If the figure in panel (a) reflects the long-run equilibrium of a profit-maximizing firm in a competitive market, the figure in panel (b) most likely reflects

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

Describe the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit-maximizing firm?

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-4. At which price range will the firm continue to operate in the short run but earn negative profits?

For a firm in a competitive market, an increase in the quantity produced by the firm will result in

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pa, in the short run the firm will earn

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

Scenario 14-4 Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year. -Refer to Scenario 14-4. What is Victor's opportunity costs of operating his new business?

When economists refer to a production cost that has already been committed and cannot be recovered, they use the term

If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements, we would expect that

A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average variable cost but greater than the firm's average fixed cost.

A firm will shut down in the short run if revenue is not sufficient to cover its variable costs of production.

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P7, a profit-maximizing firm's short-run profits can be represented by the area

When price is greater than marginal cost for a firm in a competitive market,

The competitive firm's short-run supply curve is that portion of the

A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost.

In the long run, a firm will enter a competitive industry if

Which of the following firms is the closest to being a perfectly competitive firm?

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by