question
A firm in perfect competition earns profit if:
answer
price is greater than average total cost
question
According to the data in the table, what level of output maximizes profit?
answer
8 units of output
question
According to the data in the table, when the price is $4, the firm would produce:
answer
Four units of output, although it would suffer a loss from doing so
question
If the average total cost curve is above the demand curve, then this firm is:
answer
having economic losses
question
As the market demand shifts to the left, how will the firm's level of output change?
answer
The firm will decrease its output and suffer losses.
question
Which graph best depicts an industry in which the firm's average costs decrease as the industry expands production?
answer
The graph on the left
question
In perfect competition, the marginal revenue is the same as:
answer
Price
question
In this graph, the market is initially in long-run equilibrium at point A. If this is a constant-cost industry, after the decrease in demand, which point is likely to be a short-run equilibrium and which point is likely to be the next long-run equilibrium?
answer
Point D is a short-run equilibrium and point C is the new long-run equilibrium.
question
Long-run equilibrium in perfect competition results in:
answer
both productive and allocative efficiency
question
According to the graph, if a perfectly competitive firm is producing at point A, which of the following is true?
answer
The firm earns zero economic profit.
question
According to the graphs, which of the following is likely to happen in this market in the long run?
answer
No other firms will enter this market
question
In reference to the graph, at what level of output does this perfectly competitive firm maximize profit?
answer
Q3
question
According to the graph the shut-down point corresponds to:
answer
Point d
question
According to the graph, which demand curve is associated with the shutdown point for this perfectly competitive firm?
answer
Demand curve 2
question
Which of the following is a characteristic of a perfectly competitive market?
answer
There are large numbers of buyers and sellers.
question
What is the term given to a cost that has already been paid and cannot be recovered?
answer
Sunk costs
question
In the short run, the firm should:
answer
Operate if price > average variable cost.
question
A buyer or seller that is unable to affect the market price is called a __________.
answer
price taker
question
According to the graph, what is the value of total fixed cost for this perfectly competitive firm?
answer
$2,400
question
According to the graph, which level of output maximizes profit?
answer
8 shirts per minute
question
The perfectly competitive firm represented in the graph on the right is experiencing a __________.
answer
profit in the short run
question
In perfect competition, when a firm is making positive economic profit in the short run, then new firms enter the market causing the market supply curve to __________ and the market price to __________.
answer
shift rightward, decrease
question
At which price in this graph is the perfectly competitive firm earning negative economic profit?
answer
$250
question
What does the shaded area in the graph represent for a perfectly competitive firm that produces at output level Q?
answer
Negative economic profit
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