Exam 9: Firms in Perfectly Competitive Markets

Figure 9-6 Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 9-6.At price P₃,the firm would produce

If total variable cost exceeds total revenue at all output levels,a perfectly competitive firm

Using two graphs,illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market.On the first graph,use a supply and demand graph to illustrate the positive technological change.On the second graph,use demand,ATC,MC and MR curves to illustrate the elimination of economic profit resulting from the positive technological change.Explain what is taking place in each graph.

If a firm shuts down in the short run,

Table 9-1 Table 9-1 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 9-1.What is the fixed cost of production?

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 9-5.What is the amount of the firm's fixed cost of production?

A firm's total profit can be calculated as all of the following except

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 very large number of small sellers who sell identical products imply

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.If the prevailing market price is $48,the number of firms and the industry's output will decrease in the long run.

If,for a given output level,a perfectly competitive firm's price is less than its average variable cost,the firm

Figure 9-6 Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 9-6.At price P₂,the firm would

Figure 9-8 -Refer to Figure 9-8.Consider a typical firm in a perfectly competitive industry that makes short-run profits.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

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

Market supply is found by

If a typical firm in a perfectly competitive industry is earning profits,then

In August 2008,Ethan Nicholas developed the iShoot application for the Apple iPhone 3G,and within five months had earned $800,000 from this program.By May 2009,Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales.This example indicates that in a competitive market,

If the long-run average cost curve is U-shaped,the optimal scale of production from society's viewpoint is

A perfectly competitive industry achieves allocative efficiency because

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.