question
If your local gasoline station raised its price by 20 percent, its sales of gasoline would decrease substantially because your local gas station
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has little or no market power, is small relative to the size of the gasoline market
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The analysis of competitive firms sheds light on the decisions that lie behind the
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supply curve
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Which of the following is not a characteristic of a perfectly competitive market
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many firms have market power
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free entry means that
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no legal barriers prevent a firm from entering an industry
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Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm's total revenue if it instead produced and sold 4 units of output?
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$32
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Tom produces commemorative t-shirts in a competitive market. If Tom decides to decrease his output, this will
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decrease his revenue, since the price does not rise sufficiently when output drops to offset the drop in Tom's output
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If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
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a one-unit increase in output will increase the firm's profit
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For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the
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production of the 100th unit of output increases the firm's profit by $1
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Which of these curves is the competitive firm's short-run supply curve?
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the marginal cost curve above average variable cost
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The term shutdown
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refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision a firm might make
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A sunk cost is one that
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was paid in the past and will not change regardless of the present decision
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Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year.
What is Victor's opportunity costs of operating his new business?
What is Victor's opportunity costs of operating his new business?
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$175,000
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In the long run, each firm in a competitive industry ears
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zero economic profits
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Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to
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decrease
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