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Rent (Binding 20-Year Lease)$1,000 Per WeekSales$2,000 Per WeekRaw Material Cost$1,000 Per WeekValue of Your Own Labor$500 Per Week
As president and owner of the Sour Grapes Lemonade Company, you face the costs shown. To maximize your financial well-being, you should
As president and owner of the Sour Grapes Lemonade Company, you face the costs shown. To maximize your financial well-being, you should
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continue operating in the short run.
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According to the accompanying diagram, at the profit-maximizing output, total variable cost is equal to
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0CFE
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Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is
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P2
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A purely competitive seller should produce (rather than shut down) in the short run
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if total revenue exceeds total cost or if total cost exceeds total revenue by some amount less than total fixed cost.
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At P1 in the accompanying diagram, this firm will produce
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47 units and realize an economic profit.
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In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is
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equal to the price.
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Which of the following is true under conditions of pure competition?
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No single firm can influence the market price by changing its production level.
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At P2 in the accompanying diagram, this firm will
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produce 44 units and earn only a normal profit.
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At P3 in the accompanying diagram, this firm will
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produce 40 units and incur a loss.
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Price is taken to be a "given" by an individual firm selling in a purely competitive market because
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each seller supplies a negligible fraction of the total market.
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The total revenue of a purely competitive firm from 8 units of output is $48. Based on this information, total revenue for 9 units of output must be
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$54
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At P4 in the accompanying diagram, this firm will
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shut down in the short run.
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Refer to the diagram for a purely competitive producer. If product price is P3,
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economic profits will be zero.
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Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n) (wrong)
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increase in marginal cost for firms in the industry and an increase in the industry supply curve.
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Refer to the diagram for a purely competitive producer. The firm's short-run supply curve is
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the bcd segment and above on the MC curve.
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An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of
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is equal to the marginal-revenue curve, which is a flat line at P0.
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Price is constant to the individual firm selling in a purely competitive market because
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each seller supplies a negligible fraction of total supply.
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In the short run, a purely competitive firm will earn a normal profit when
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P = ATC.
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At P1 in the accompanying diagram, this firm will produce
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47 units and realize an economic profit.
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If the supply and demand curves in the provided graph represent the market supply and demand for a purely competitive industry, then the demand curve that an individual firm in the industry faces
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is equal to the marginal-revenue curve, which is a flat line at P0.
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