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Exam 14: Firms in Competitive Markets

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Question 71

Multiple Choice

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When firms in a perfectly competitive market face the same costs,in the long run they must be operating

A) under diseconomies of scale.
B) with small,but positive,levels of profit.
C) at their efficient scale.
D) where price is equal to average fixed cost.

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Question 72

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Firms that operate in perfectly competitive markets try to

A) maximize revenues.
B) maximize profits.
C) equate marginal revenue with average total cost.
D) All of the above are correct.

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Question 73

Multiple Choice

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For a firm operating in a competitive industry,which of the following statements is not correct?

A firm that has little ability to influence market prices operates in a

For a competitive firm,

What name do economists have for a cost that has already been committed and cannot be recovered?

A firm that exits its market has to pay

Competitive markets are characterized by

Mrs.Smith is operating a firm in a competitive market.The market price is $6.50.At her profit-maximizing level of output,her average total cost of production is $7.00,and her average variable cost of production is $6.00.Which of the following statements about Mrs.Smith's firm is correct?

Which of the following statements best reflects a price-taking firm?

Figure 14-9 In the figure below,panel (a) depicts the linear marginal cost of a firm in a competitive market,and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-9.If there are 400 identical firms in this market,what is the value of Q2?

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units.If the current price is $9,the marginal cost of the 50th unit is $9,and the average total cost of producing 50 units is $4,what is the firm's profit?

If the profit-maximizing quantity of production for a competitive firm occurs at a point where the firm's average total cost of production is falling as production increases,then the firm

If firms are competitive and profit maximizing,the price of a good equals the

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14.What is the marginal revenue of the 4th unit?

Figure 14-8 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-8.Which line segment best reflects the long-run supply curve for this firm?

Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses.Identify costs,revenue,and the economic losses on your graph.Using your graph,determine whether an individual firm will shut down in the short run,or choose to remain in the market.Explain your answer.

Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10.This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

A competitive firm is maximizing its profit by selling 150 units of output.The firm's marginal cost is $8 and its average total cost is $6.The firm's profit amounts to __________.