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Exam 10: Pure Competition in the Short Run

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Question 71

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The first table shows cost data for a single firm. Now suppose that there are 600 identical firms in this industry, each with the same cost data. Suppose, too, that the demand curve for this industry is as shown in the second table. At equilibrium, each firm will realize

A) an economic profit of $155.
B) an economic profit of $35.
C) a loss of $45.
D) a loss of $135.

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Question 72

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The accompanying table gives cost data for a firm that is selling in a purely competitive market. The marginal cost of the fifth unit of output is

A) $80.
B) $90.
C) $50.
D) $20.

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Question 73

Multiple Choice

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If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing

The Campus Crustacean Company receives $2 per box for its crawfish and is selling 1,600 boxes to maximize its profits. What is the profit per box of crawfish at this equilibrium level of output if the average variable cost is $1 per box and total fixed costs are $1,200?

Explain the marginal revenue and marginal cost approach to profit maximization, and use it to describe profit, loss, and shut-down situations for the purely competitive firm.

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If product price is $25, the firm will

Which of the following is characteristic of a purely competitive seller's demand curve?

Which point in the accompanying graph is the shutdown point for the firm?

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the

A purely competitive seller should produce (rather than shut down) in the short run

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will

In the short run, fixed costs for a profitable competitive firm are

Farmer Jones is producing wheat and must accept the market price of $6.00 per bushel. At this time, her average total costs and her marginal costs both equal $5.00 per bushel. Her minimum average variable costs are $3.50 per bushel. In order to maximize profits or minimize losses in the short run, farmer Jones should

T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2.00 each. At this level of output, the average total cost is 2.50 and the average variable cost is $2.20. Based on these data, the firm should

The accompanying table gives cost data for a firm that is selling in a purely competitive market. We can infer that, at zero output, this firm's total fixed, total variable, and total costs are

In the provided diagram, the short-run supply curve for this firm is the

The table shows the total costs for a purely competitive firm. If the product sells for $1,200 a unit, the firm's profit-maximizing output is

The accompanying table applies to a purely competitive industry composed of 100 identical firms. For each of the 100 firms in this industry, marginal revenue and total revenue will be

The first table shows cost data for a firm that is selling in a purely competitive market. Now assume there are 100 identical firms in this industry, each of which has the same cost data as the single firm described in the cost table. Now consider the demand curve data for this industry as shown in the second table. The equilibrium price in the market will be

The accompanying table gives cost data for a firm that is selling in a purely competitive market. At 5 units of output, average fixed cost, average variable cost, and average total cost are