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Curve (1) in the diagram is a purely competitive firm's
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total economic profit curve.
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A firm reaches a break-even point (normal profit position) where
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total revenue and total cost are equal.
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Firms seek to maximize
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total profit.
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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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In which market model would there be a unique product for which there are no close substitutes?
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pure monopoly
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For a purely competitive seller, price equals
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all of these.
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Price and marginal revenue are identical for an individual purely competitive seller.
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True
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A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should
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produce because the resulting loss is less than its TFC.
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Which of the following is a feature of a purely competitive market?
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Products are standardized or homogeneous.
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Which of the following is characteristic of a purely competitive seller's demand curve?
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Price and marginal revenue are equal at all levels of output.
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A purely competitive seller is
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a "price taker."
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If at the MC = MR output, AVC exceeds price,
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some firms should shut down in the short run.
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Economists use the term imperfect competition to describe
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those markets that are not purely competitive.
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Given the accompanying table, what is the short-run profit-maximizing level of output for the firm?
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4 units
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According to the accompanying diagram, to maximize profit or minimize losses, this firm will produce
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E units at price A.
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A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its
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total variable costs.
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A purely competitive firm is producing at the point where its marginal cost equals the price of its product. If the firm increases its output, then total revenue will
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increase and profits will decrease.
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Assume a purely competitive firm is selling 200 units of output at $3 each. At this output, its total fixed cost is $100 and its total variable cost is $350. This firm
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is making a profit, but not necessarily the maximum profit.
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If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output
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marginal revenue exceeds ATC.
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Economists would describe the U.S. automobile industry as
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an oligopoly.
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