question
Perfect Competitors - Price Takers or Makers?
answer
Price Takers
question
Price-taking firm's optimal output rule
answer
A price-taking firm's profit is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.
question
True or False? Is a price-taker's marginal revenue equal to market price?
answer
True
question
At market price can a perfectly competitive firm sell as much as it wants?
answer
Yes because it is perfectly elastic
question
Profit Formula
answer
Profit = (P-ATC)*Q
question
Break-even price
answer
Market price at which it [the firm] earns zero profits
question
Whenever the market price exceeds minimum ATC
answer
The producer is profitable
question
Whenever the market price equals minimum ATC
answer
The producer breaks even
question
Whenever the market price is below minimum ATC
answer
The producer is unprofitable
question
Shut-down Price
answer
Minimum average variable cost
question
A monopolist maximizes profit where...
answer
Quantity is MC = MR and price is set at Demand directly above where MC= MR
question
A monopoly produces DWL...
answer
Where a triangle is formed beside profit
question
A monopoly creates consumer surplus...
answer
Where a triangle is formed above profit
question
Price regulation
answer
Limits the price that monopolist is allowed to charge
question
What is a common form of price regulation?
answer
Setting a price ceiling.
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