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The assumptions of perfect competition imply that
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Individuals in the market accept the market price as given
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Zoe's Bakery determines that P<ATC and P>AVC. Zoe should:
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Continue to operate even though she is experiencing economic loss
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The break-even price for a perfectly competitive firm is equal to
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The Minimum value of average total cost
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(Table 58-1: Soybean Cost) The cost of production of a perfectly competitive soybean farmer are given in the table. If the market price is $15, how many bushels will the farmer produce to maximize short-run profit?
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5
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The shut-down price is:
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The minimum level of AVC
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(Figure 59-5: Perfectly Competitive Firm) The figure shows a perfectly competitive that faces demand curve d, has the cost curves shown, and maximizes profit. If the market price is $3, the firm will produce___ units of output per day.
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300
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(Figure 59-5: Perfectly Competitive Firm) The figure shows a perfectly competitive that faces demand curve d, has the cost curves shown, and maximizes profit. Given the market price, the firms total revenue per day is:
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$900
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(Figure 59-5: Perfectly Competitive Firm) The figure shows a perfectly competitive that faces demand curve d, has the cost curves shown, and maximizes profit. If the firm faces a market price of $3, its total profit per day is:
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$300
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(Figure 59-6: Short-Run Costs) This firm's short run supply curve begins at quantity
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Q
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In perfect competition, the assumption of easy entry and exit implies that:
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In the long run all firms in the industry will earn zero economic profit
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The figure shows cost curves for a firm operating in a perfectly competitive market. If the market price is P4
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There will be economic profits and firms will enter the industry in the long run
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Suppose that some firms in a perfectly competitive industry are incurring negative economic profits. In the long run, the:
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Industry supply curve will shift to the left
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When a perfectly competitive firm is in the long-run equilibrium, the firm is producing at
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Minimum long-run average total cost
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Lilly is the price-taking owner of an apple orchard. Currently the price of apples is high enough that Lilly is earning positive economic profits. In the long run, Lilly should expect
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Lower apple prices due to entry of new firms
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If the long-run market supply curve for a perfectly competitive market is horizontal, then this industry is one that exhibts
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Constant Costs
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For a perfectly competitive firm, marginal revenue:
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is equal to price
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(Figure 58-1: Marginal Revenue, Costs, and Profits) In the figure, if the market price increases to $20, marginal revenue____ and profit-maximizing output_____.
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Increases; Increases
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(Figure 58-1: Marginal Revenue, Costs, and Profits) In the figure, if market price decreases to $16, marginal revenue____ and profit-maximizing output____.
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Decreases; Decreases
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If price is currently between average variable cost and average total cost, then in the short run a perfectly competitive firm should
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Continue to produce to minimize losses
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For a perfectly competitive firm, the short-run supply curve is the
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Rising part of the MC curve beginning at the shut-down point
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(Figure 59-7: Perfectly Competitive Firm II) If this firm's MR curve is MR1, the firm will profit-maximize by producing____ units of output and its economic profit will be____.
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Q3; Positive
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(Figure 59-7: Perfectly Competitive Firm II) If this firm's MR curve is MR2, the firm will profit-maximize by producing____ units of output and its economic profit will be____.
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Q2; Negative
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The supply curve found by summing up the short-run supply curves of all the firms in a perfectly competitive industry is called the:
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Short-run market supply curve
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Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:
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More firms will enter the market, driving the price of haircuts down and the profits of individual firms back down to zero
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In the long-run equilibrium, economic profit in a perfectly competitive industry are
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Zero
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If some firms in a perfectly competitive industry are earning positive economic profits, then in the long run, the
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Industry supply curve will shift to the right
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In perfect competition
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A firm's total revenue is found by multiplying market price by the firm's quantity of output.
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Consider the following data for a perfectly competitive firm: price is $9, output is 30 and average total cost is $7. The firms profits are equal to:
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60 ((9-7)*30)
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Economic profits in a perfectly competitive industry induce____, and loses induce____.
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Entry; Exit
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A perfectly competitive industry is currently in a state of long-run equilibrium. Which of the following must be true?
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P=MR=MC=ATC
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