question
What is the lowest price at which the firm will start producing output in the short run?
answer
Lowest rate is at minimum AVC
.6
.6
question
The graphs suggest that in the long run, assuming no changes in the given information, the market?
(Graphs show the price above the MC and ATC curves
(Graphs show the price above the MC and ATC curves
answer
Supply curve shift to the right to decrease price
question
Assume a purely competitive constant- cost industry is initially at long run equilibrium. Now suppose that a decrease in consumer demand occurs. After all the long run adjustments have been completed the new equilibrium price
answer
Will be the same as the initial price, and the output will be less
question
The lowest point on a purely competitive firms short run supply curve corresponds to the minimum point on
answer
AVC curve
question
When the firm is in equilibrium in the short run, the amount of economic profit per unit is
answer
EH
question
The marginal revenue from the third unit of output is
2 TR = 80
3 TR= 120
2 TR = 80
3 TR= 120
answer
120-80 =
$40
$40
question
In a purely competitive industry each firm
answer
can easily enter or exit the industry
question
In pure competition, the demand for the product of a single firm is perfectly
answer
elastic because many other firms produce the same product
question
If there is a decrease in demand for a product in a purely competitive industry, it results in an industry contraction that will end when the product price is
answer
equal to the marginal cost
question
The representative firm in a purely competitive industry
answer
will ean zero economic profit in the long run
question
At what price would the firm break even
answer
when MC= ATC
question
The short run supply curve of a purely competitive producer is based primary on its
answer
MC curve
question
In a purely competitive industry
answer
economic profits may exist in the short run but not in the long run
question
What will happen in the long run to industry supply and equilibrium price P of the product?
shows D=MR below the point MC intersects ATC
other shows supply and demand
shows D=MR below the point MC intersects ATC
other shows supply and demand
answer
Shift Supply left hen
S will decrease and P will increase
so MC= MR=D
S will decrease and P will increase
so MC= MR=D
question
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
answer
will also be $5
Where MR=MC is equilibrium MR/D shows Price
Where MR=MC is equilibrium MR/D shows Price
question
If the demand curve faced by an individual firm is downward-sloping, the firm cannot be an
answer
purely competitive firm
question
assume that the market for soybeans is purely competitive. Currently, firms growing soybeans are experiencing economic profits. If the long run, we can expect
answer
new firms to enter causing the market price of soybeans to fall
question
The graphs suggest that in the long run, as automatic adjustments occur, the demand curve facing the individual firm will
shows two graphs
one: price above MC and ATC intersection
other: Price at equilibrium of S and D
shows two graphs
one: price above MC and ATC intersection
other: Price at equilibrium of S and D
answer
Demand will shift down
question
Suppose that joe sells pork in a purely competitive market. The market price of pork is $3 per pound. Joe's marginal revenue from selling the 12th point would be
answer
$3
question
The demand curve faced by a purely competitive firm
answer
is the same as its marginal revenue curve
question
A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 500 units is $1.5. The minimum possible average variable cost is $1. The market price of the product is $1.25. To maximize profits or minimize losses, the firm should
answer
continue producing but produce less than 500 units
question
The market price of the product in the short run is
answer
$40
price for all when TR/Output is $40
price for all when TR/Output is $40
question
Which of the following changes in its market would allow the firm to earn positive normal profits again?
graph shows
MC, ATC, AVC, MR
with MR between ATC and AVC
graph shows
MC, ATC, AVC, MR
with MR between ATC and AVC
answer
when MC intersects ATC = normal profits or zero economic profit
an increase in market demand give normal profits
an increase in market demand give normal profits
question
the firm's short run supply curve is
answer
the bcd segment and above the MC curve
short run supply is based off MC is from minimum point of AVC and up
short run supply is based off MC is from minimum point of AVC and up
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