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Which of the following is NOT a characteristic of a perfectly competitive market?
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c) It is difficult for a firm to enter or leave the market
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Which of the following is NOT a characteristic of a competitive market?
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d) Economic profits must be positive in the short run.
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If a firm is perfectly competitive, then
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a) its demand curve is perfectly elastic.
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For a firm in a perfectly competitive industry
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d) the demand curve is the same as the marginal revenue curve
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For a firm in perfect competition
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b) marginal revenue and product price are equal at every level of output
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Economists generally assume that firms attempt to maximize
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d) total profits
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In the figure above ,the market price charged by this firm is
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b) $10 per unit of putput
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In the figure above, at the output level between %units and 13 units,
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c) The firm's accounting profits are positive
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A perfectly competitive firm will maximize when
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c) marginal cost is equal to marginal revenue
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For a perfectly competitive firm, the short run break-even point occurs at the level of output where
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d) MR=P=MC
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For a perfectly competitive firm, when MC is less than MR,
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a) the producer will have an incentive to expand output
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If a perfectly competitive firm is producing at a level of output at which marginal output exceeds marginal revenue,
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d) the firm should reduce production
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A firm in a competitive industry faces the following short run cost and revenue conditions. ATC= $8, AVC= $4, and MR=MC= $6. The firm should
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d) continue to operate at the same price and output in the short run.
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Suppose a perfectly competitive firm faces the following short run cost and revenue conditions: ATC= $12, AVC=$8, MC=$12, MR= $10. The firm should
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a) decrease output
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Suppose a firm faces the following short run cost and revenue conditions: ATC= $7, AVC=$5, MC=$6.50, MR=$6.50.The firm should
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c)remain at the same position
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Suppose a perfectly competitive firm faces the following short run cost and revenue conditions: ATC=$6, AVC=$4, MC=$3.50, MR=$3.50. The firm should
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d)shut down
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Suppose a perfectly competitive firm faces the following cost and revenue conditions: ATC=$25, AVC=$20, MC=$25, MR=$28. The firm should
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b)increase output
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Suppose a perfectly competitive firm faces the following short run cost and revenue conditions: ATC=$8, AVC=$5, MC=$8, MR=$9. The firm should
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b)increase output
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A firm in a competitive industry faces the following cost and revenue conditions: ATC=$6, AVC=$3, MR=MC=$5
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b)experiencing economic loss
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For a competitive firm, any output price below its minimum AVC is its
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b)shut-down price
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The short-run shut-down price occurs where
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c) price equals AVC at the minimum point
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At the short-run break-even point, the competitive firm is
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b) making zero economic profit
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In the figure above, the firm is operating at d2, then to maximize profits it will produce at output level
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b)B
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In the figure above, the firm will shut down if price falls below
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d) E
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If the firm in the figure above produces output level D, it incurs an average fixed cost of production equal to the distance
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d)KR
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The firm in the figure above breaks even when market price is
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a) H
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Assuming fixed factor prices, the short-run industry supply curve for a perfectly competitive industry is equal to
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c) the sum of the MC curve above the minimum AVC
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In the figure above , if the price is equal to P4, the firm will
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a) earn positive profits
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In the figure above, point A represents a competitive firm's
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c) break-even point
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In the figure above, when the price is equal to P1, the firm should
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d) shut down
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The competitive seller' short-run supply curve is
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c) the part of its marginal cost curve above the average variable cost curve
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Which of the following could generate economic profits for perfectly competitive firms in the short run?
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d) a decrease in input prices
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In a perfectly competitive industry, the industry demand curve
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d) is downward sloping
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What is the shape of the long-run supply curve in a decreasing cost industry?
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c) downward sloping
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If frims are just breaking even in a competitive industry in the short-run, we can expect
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d) price and input to remain constant
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If an industry has constant costs, any shift in demand will eventually
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c) be met by an equal change in supply, and equilibrium price will not change
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In a decreasing cost industry, an increasing in output will lead to
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c)a reduction in long-run per-unit cost industry
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If an increase in an industry's output is accompanied by an increase in long-run per-unit costs, then
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c)the firm is most likely an increasing costs industry
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If a constant cost competitive industry experiences an increase in the demand for its product, we would expect
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d) only the quantity supplied of the product to increase
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In a competitive market, positive economic profits act to
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a) attract new entrants into the industry
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Which of the following is NOT correct for a competitive firm in long-run equilibrium?
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c) MC=MR>LAC
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In the long-run in a competitive industry
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b) economic profits will be zero
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Which of the following is NOT true for a perfectly competitive firm in the long run?
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b) MC>LAC
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Which of the following is NOT correct concerning perfectly competitive firms in the long run?
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d) The opportunity cost of capital is zero
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In the long run, the competitive firm
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b) earns only a normal profit
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For a firm in a competitive industry
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c) short-run economic profits may be positive, but long-run economic profits must be zero
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Firms in a competitive industry are producing goods efficiently in the long run if each is producing at the minimum point of the
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c) LAC curve
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Economic efficiency means
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c) that it is possible to increase the output of any good without lowering the total value of the output of the economy.
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What is always true about the short-run equilibrium position for a firm in perfect competition?
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c)MR=MC=P=AR
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The short-run shut down price for the firm in perfect competition is where price equals
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d) minimum AVC
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The 'lemon problem' will exist
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b) whenever there is asyetry in information between buyers and sellers about the quality of a product
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In the figure above, if firm 1 is maximizing its profits, then, at output level Q1, marginal revenue must
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b) equal P2
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In th e figure above, assuming firm 1 ans firm 2 are the sole producers in the industry, the industry supply at P1 is equal to
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c) Q2+Q4
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In perfect competition
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b) no buyer or seller can influence the market price
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The perfectly competitive firm faces
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c) a perfectly elastic demand
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A perfectly elastic demand function
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b) is characteristic of an individual firm operating in a perfectly competitive market.
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When demand is perfectly elastic, marginal revenue is
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b) equal to price
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For a competitive firm, profit maximization occurs where
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b) marginal revenue equals marginal cost
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???
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c) maximizing economic profits
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When price is greater than both marginal cost and average variable cost, the competitive firm
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b) should increase its level of output
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The rising portion of a competitive firm's marginal cost curve, above the intersection with AVC, is its
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c) supply curve
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If the price is $5, marginal cost is $5, average total cost is $3,and the quantity produced is 150 units, then
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d)the firm is earning $300 and maximizing profits
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If a firm is producing where marginal cost is greater than the price, the firm
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c) should reduce its output level
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At a competitive firm's short- run break even price,
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a) P=ATC
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When the firm is making economic profit
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c) P=ATC
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When a firm has zero economic profit,
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c) it has a positive accounting profit
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When a firm has an accounting profit which is negative, it
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c) has total revenue that is less than total cost
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A competitive industry's short-run supply curve is best described as
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d) the horizontal summation of the individuals firms' supply curves
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A firm should shut down in the short-run when
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a) P<AVC
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If AVC is $6 when P=MC, a firm
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c) should shut down if price is greater than $6
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A competitive firm's short-run break even output occurs
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b) at the minimum point of its ATC curve
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A firm should never produce any output if
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a) P<AVC
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In a perfectly competitive market, if P>ATC in the short-run, there is apt to be
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a) entry of new firms onto the market
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The exiting of firms from a perfectly competitive industry occurs when
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a) opportunity cost cannot be covered
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A constant cost industry is one in which
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c) there is no change in long-run per unit costs , even as output varies
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With an increasing cost industry, an increase in industry output will
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a) shift the ATC of each producing firm up
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The long-run equilibrium, the competitive firm will
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c) produce where marginal cost equals ATC
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For a competitive firm at its long-run equilibrium
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a) P=MR=MC=AC
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With marginal cost pricing
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c) the price charged is equal
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When MR<MC for a firm, the firm should
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a) reduce its level of output
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Each firm in a perfecty competitive industry is
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c) a price taker
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Which of the following is NOT a characteristic of a perfectly competitive industry?
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c) sellers have better information about the product than consumers
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The 'lemon problem' is a situation in which
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c) consumers are only willing to pay that low price of a low-quality product because they don't know the actual level of quality
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The demand curve of a perfectly competitive industry is
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a) downward sloping
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The demand curve of a perfectly competitive firm is
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b) perfectly elastic
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A firm in a perfectly competitive market maximizes profits when it finds
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b) the quantity at which total revenue minus total cost is the greatest
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For a firm in perfectly competitive market, average revenue equals
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c) price
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A firm should continue producing until
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b) the cost of increasing output by one more unit equals the revenues obtainable from selling the extra unit
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A firm seeking to maximize profits should produce at the rate of output at which
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b) marginal revenue equals marginal cost
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According to the table, if the price is $10 for a firm in a competitive market, then the firm should produce
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b) 106 units
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The marginal revenue curve of a perfectly competitive firm
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d) is also the demand curve
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Profit per unit is found by the difference between
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a) average revenue and average total cost
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According to the figure above, if the firm is making zero profits, what quantity is the firm selling and at what price?
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b) Q=1000; P=$5
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A firm making losses should operate in the short-run as long as
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b) the price per unit sold is greater than the average variable cost per unit produced
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A firm shuts down in the short-run, experiences losses equal to its
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a) total fixed costs
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the short-run break-even price is the point at which
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b) marginal cost, average total cost, and marginal revenue are all equal
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A firm is currently producing the quantity where price equals the minimum point on the average variable cost curve. If wage rates increase, the firm will
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b) shut down since it would no longer be covering its variable costs
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Economic profits at the short-run break-even price are
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c) equal to zero
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Accounting profits at the firm's break-even point are
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a) positive
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In a perfectly competitive market, a firm's short-run supply curve equals
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b) its marginal cost curve to or above the point of intersection with its average variable cost curve
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If price is below AVC at all rate of output, the quantity supplied by a perfect competitor will equal
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a)zero
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In the model of perfect competition, the market demand curve is found by
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c) horizontally summing the demand curves of individual consumers
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Profits and losses are true market ...because they
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b) convey information about where resources should flow into or out of, and they reward people who act on the information
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A law that restricts plant closings will
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c) prevent resources from flowing to their highest valued uses
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