question
For a competitive firm, ________ cost is equal to ________ which is equal to marginal ________.
answer
Marginal; Price; Revenue
question
The price at which quantity of a good equals the quantity supplied is called the ________ price.
answer
Equilibrium
question
The sum of the marginal cost curve of all the firms is the ______ supply curve.
answer
Market
question
Which of the following are determinants of the market supply of a competitive industry?
- The number of firms.
- Changes in the market demand.
- Technology
- The prices of inputs
- Taxes and subsidies
- The number of firms.
- Changes in the market demand.
- Technology
- The prices of inputs
- Taxes and subsidies
answer
- The number of firms
- Technology
- The prices of inputs
- Taxes and subsidies
- Technology
- The prices of inputs
- Taxes and subsidies
question
Which of the following constitutes an investment decision by Franco the pizza owner?
- He buys a new refrigerator
- He decides to lease an additional oven
- He hires a new manager.
- His inventory of cheeses is expended.
- He buys a new refrigerator
- He decides to lease an additional oven
- He hires a new manager.
- His inventory of cheeses is expended.
answer
- He buys a new refrigerator.
- He decides to lease an additional oven.
- He decides to lease an additional oven.
question
If a frim decides to build, or lease plants and equipment; to enter or exit an industry, this frim is making...
answer
An investment decision.
question
True or False: Firms within perfect competition are likely to earn economic profit in the long run.
answer
False
question
A market in which no buyer or seller has market power is known as...
answer
Perfect Competition.
question
Which of the following is true for a perfectly competitive market:
- Firms sell different products.
- There are no obstacles to entry or exit of firms.
- Firms earn super normal profits.
- There is a single buyer in the market.
- Firms sell different products.
- There are no obstacles to entry or exit of firms.
- Firms earn super normal profits.
- There is a single buyer in the market.
answer
- There are no obstacles to entry or exit of firms.
question
Which of the following best describes perfect competition?
- An industry involving one large firm producing many products and in which new firms can enter or exit the industry very easily.
- An industry involving a few firms producing identical products and in which new firms can enter or exit the industry very easily.
- An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.
- An industry involving two firms producing identical products and in which new firms can enter or exit the industry very easily.
- An industry involving one large firm producing many products and in which new firms can enter or exit the industry very easily.
- An industry involving a few firms producing identical products and in which new firms can enter or exit the industry very easily.
- An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.
- An industry involving two firms producing identical products and in which new firms can enter or exit the industry very easily.
answer
- An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.
question
In the early 1980's microcomputer industry, price competition was fiercest in the ________ computer market.
answer
Home
question
Technological improvements are illustrated by the downward shift of the...
answer
average total cost(ATC) and the marginal cost(MC) curves.
question
If Price is ________ than a firms minimum average ________ cost, the firm will shut down production.
answer
Lower; Variable
question
In the long-run, firms will exit the market when...
answer
Marginal Revenue(MR) falls below Average Total Cost(ATC)
question
Price competition came to the personal computer market _______ it did to the home computer market.
answer
later than
question
________ is relatively rare in the real world, although this market is highly ________ to several industries.
answer
Perfect Competition; relevant
question
True or False: The market structure for many industries changes over time.
answer
True
question
Apple's early involvement in the evolution of personal computers was...
answer
simply as an assembler of existing components.
question
A perfectly competitive frim should produce the amount of output where ________ equals ________ equals ________.
answer
Price; Marginal Revenue(MR); Marginal Cost(MC)
question
When price is equal to the Average Total Cost(ATC), the firm incurs a ________ economic profit.
answer
zero
question
In perfect competition, a firms economic profit is equal to its product ________ or ________ revenue minus Average Total Cost(ATC) multiplied by output.
answer
Price; Marginal
question
Economists maintain that new firms are attracted into an industry due to:
answer
Economic Profit
question
Which of the following summarizes why it is possible for a firm to freely enter and exit a perfectly competitive market?
answer
There are no significant legal, technological, financial or other obstacles prohibiting firms from entry and exit.
question
Which of the following will cause new firms to enter an industry?
answer
If market price exceeds minimum Average Total Cost(ATC), the resulting economic profits will attract new firms to the industry.
question
If market Price initially exceeds minimum Average Total Costs(ATC), the resulting economic profits will attract new firms to the industry eventually resulting in...
answer
industry expansion that increases supply until price equals minimum Average Total Cost(ATC)
question
In the long-run competitive equilibrium, a firm will earn zero economic profits where ________ will just cover ________ because the revenue per unit and the total cost per unit are equal.
answer
Total Revenue(TR); Total Cost(TC)
question
The long-run, every purely competitive firm tends to operate at its...
answer
Minimum ATC
question
True or False: as profit margins in the computer market narrowed because of competition, quick-thinking entrepreneurs realized that future profits would have to come from price hikes or cost increases.
answer
False
question
When price is below ________ total cost, the firm incurs an economic loss.
answer
average
"Profit/Loss = (Price - ATC) x Quantity"
"Profit/Loss = (Price - ATC) x Quantity"
question
________ profits in a competitive industry will attract new firms into the industry.
answer
Economic
question
If price is initially less than minimum Average Total Cost(ATC), resulting losses will cause firms to leave the industry eventually resulting in...
answer
industry contraction that decreases supply until the price rises again to equal minimum Average Total Cost(ATC)
question
Competitive market economies generate:
- Time efficiency
- allocative efficiency
- capital efficiency
- product efficiency
- quality efficiency
- Time efficiency
- allocative efficiency
- capital efficiency
- product efficiency
- quality efficiency
answer
- allocative efficiency;
- productive efficiency
- productive efficiency
question
Allocative efficiency is achieved when it is impossible to obtain any net gains for society by simply...
answer
altering the combination of good and services that are produced from society's limited supply of resources.
question
In pure competition, society's resources are allocated efficiently when:
answer
profit-motivated firms produce output to the point where price or marginal revenue(MR) and marginal cost(MC) are equal.
question
Competition forces firms to select output levels at which average total cost(ATC) is ________
answer
Minimized
question
In pure competition, productive efficiency is attained when price ________ minimum average total cost(ATC)
answer
equals
question
Consumers benefit from productive efficiency by paying the ________ product price possible under the prevailing technology and cost conditions, causing firms to earn only ________ profit.
answer
Lowest; zero economic
question
In the long-run, purely competitive firms will not survive if they do not use a least-cost productive method because ________.
answer
Pure competition forces firms to produce at the minimum average total cost(ATC) and to charge a price that is consistent with that cost.
question
When efficiency is disrupted in perfect competition, producers will reallocate resources until product supply is such that price will again ________ marginal cost.
answer
equal
question
True or False: In perfect competition, consumers benefit from productive efficiency by paying the highest price possible.
answer
False
question
The Competitive dynamic following Apple's introduction of its MP3 player (iPOD) and tablet computer (iPAD) brought consumers ________
answer
better products at lower prices
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