question
Max profit
answer
MR=MC
question
4 conditions for perfect competition
answer
1.Firms Sell a Standardized Product
2.Firms Are Price Takers
3.Free Entry and Exit
4.Firms and Consumers Have Perfect Information
2.Firms Are Price Takers
3.Free Entry and Exit
4.Firms and Consumers Have Perfect Information
question
Shutdown Condition
answer
if price falls below the minimum of average variable cost, the firm should shut down in the short run
question
Short-run breakeven point
answer
the point at which price equal to the minimum of average total cost.
question
When isoquants are perfect SUBSTITUTES
answer
Firm will only employ 1 of the 2 inputs
Diagonal negative slope
Diagonal negative slope
question
When isoquants are perfect COMPLIMENTS
answer
For every unit of L, 2 units of k
L shaped
L shaped
question
A firm that is trying to produce a given level of output Q0 at the lowest possible cost will
answer
select the input combination at which an isocost line is tangent to the Q0 isoquant.
question
The MC curve slopes upward due to
answer
diminishing returns
question
If firms are price takers this implies that
answer
the demand curve facing the firm is perfectly elastic.
question
In a competitive industry, the industry's short-run supply curve is
answer
the horizontal sum of the marginal cost curves.
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