question
A firm in a perfectly competitive market _____
answer
has to accept the market price for its product.
question
A perfectly competitive firm's short-run supply curve is the same as _____
answer
he portion of its marginal cost curve above the minimum average variable cost.
question
Adam's Apples, a small firm supplying apples in a perfectly competitive market, decides to cut its production to half this year. Which of the following is likely to occur in this case?
answer
The market price of apples will not be affected.
question
At its present rate of output, Barrel O' Biscuits, a perfectly competitive firm, finds that its marginal cost exceeds its marginal revenue and its price exceeds its average variable cost. To maximize profit, the firm should _____
answer
decrease output.
question
For a perfectly competitive firm operating at the profit-maximizing output level in the short run, _____
answer
marginal cost equals price.
question
For perfectly competitive firms, which of the following correctly shows the relationship among market price (P), average revenue (AR), and marginal revenue (MR)?
answer
price = average revenue (AR) = marginal revenue (MR)
question
If a firm is producing at an output level where the total revenue curve intersects the total cost curve, which of the following is true of the firm?
answer
Its profit is zero.
question
In the long run, the entry of new firms in a competitive industry _____
answer
makes the market demand curve steeper.
question
In the short run, if a firm shuts down, its loss is equal to _____
answer
its fixed cost.
question
Long-run equilibrium for a perfectly competitive firm occurs when _____
answer
price (P) = marginal cost (MC) = short-run average total cost (SRATC) = long-run average cost (LRAC).
question
Refer to Exhibit 8.4, which shows the demand and the cost curves of a perfectly competitive firm. At a market price of P1, the profit-maximizing quantity for the firm is
answer
d units of output.
question
Refer to Exhibit 8.4, which shows the demand and the cost curves of a perfectly competitive firm. The firm will earn zero economic profit _____
answer
at a price of P2.
question
Refer to Table 8.3, which shows the output supplied by a firm and its total cost of production. If the market price is $8.50, the profit-maximizing output and profit are _____
answer
40 units and $35, respectively.
question
Refer to Table 8.4, which shows the output supplied by a firm and its total revenue. What is the difference between the firm's price and the market price when the quantity of output is 10 units?
answer
$0
question
Refer to Table 8.5, which shows the output supplied by a firm, its total revenue, and its total cost of production. It represents a firm in the _____
answer
short run, because a firm incurs fixed cost.
question
Suppose the equilibrium price in a perfectly competitive industry is $100, and a firm in the industry charges $112. Which of the following is likely to happen?
answer
The firm will not be able to sell any of its output.
question
The demand curve for the output of a perfectly competitive firm is _____
answer
perfectly elastic.
question
The price charged by a perfectly competitive firm is determined by _____
answer
market demand and market supply.
question
The significance of the minimum point on the average variable cost curve is that _____
answer
it is the point of indifference between producing at a loss and shutting down.
question
Which of the following firms is most likely to be a perfectly competitive firm?
answer
a farm that grows soybeans
question
Which of the following is not necessarily a characteristic of a perfectly competitive market structure?
answer
low prices
question
Which of the following is true of a perfectly competitive market?
answer
Each seller supplies only a small fraction of the total amount in a market.
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