question
The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
answer
price taker
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In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
answer
what quantity to produce
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A perfectly competitive industry is a
answer
Hypothetical extreme
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Why are some producers forced to sell their products at the prevailing market price?
answer
High degree of similarity to competitor's products
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The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead
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Are two stark realities any business firm must recongnize
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In economics, the term "shutdown point" refers to the point where the
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Marginal cost curve crosses the average variable cost curve
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In the ________, the perfectly competitive firm will react to profits by __________________________ .
answer
Long run; increasing its production
question
I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output
answer
is dictated by the forces of demand and supply.
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Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should
answer
Keep the business open in the short run, but plan to go out of business in the long run
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If the price that a firm charges is higher than its ________________ cost of production for that quantity produced, then the firm will earn profits.
answer
Average
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If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses
answer
average cost
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If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?
answer
price of competing products
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It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, ____________________.
answer
could likely result in a notable loss of sales to
competitors
competitors
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Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?
answer
to produce the highest profitable quantity of output at the lowest possible marginal cost
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If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________
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shutdown point
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If a perfectly competitive firm is a price taker, then
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Pressure from competing firms will force acceptance of the prevailing market price
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When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is
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preparing to exit operations
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An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________
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Accounting profit; excluding oppurtunity cost
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Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar products.
answer
perfect competition
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A manufacturer would likely make an ___________ in a market following the long-run process of beginning and expanding production in response to ________________ .
entry; a sustained pattern of profits
entry; a sustained pattern of profits
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entry; a sustained pattern of profits
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In economics, labor demanded is synonymous with
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Devrived demand
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Under perfect competition, any profit-maximizing producer faces a market price equal to its
answer
marginal costs
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In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _____________________ .
answer
short run; losses are smallest
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Economic profit can be derived from calculating total revenues minus all of the firm's costs,
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including its opportunity costs.
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______________________ refers to the additional revenue gained from selling one more unit.
answer
marginal revenue
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In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ .
answer
marginal revenue; marginal cost
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In the _________, the perfectly competitive firm will seek out ________________________ .
answer
short run; the quantity of output where profits are highest