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Exam 9: Firms in a Competitive Market

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Question 51

Multiple Choice

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If Dorothy's Doughnuts is a perfectly competitive firm and is currently incurring economic losses of $500,

A) firms will enter the market.
B) firms will exit the market.
C) individuals will demand more doughnuts.
D) individuals will demand fewer doughnuts.
E) the market supply curve will shift to the right.

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Question 52

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The market for hot dogs on the streets of New York City can be considered close to a perfectly competitive market.Because there are so many individuals buying and selling hot dogs

A) there is a shortage of hot dogs.
B) there is a surplus of hot dogs.
C) market forces set the price in the market.
D) firms are able to make large economic profits.
E) firms cannot make positive accounting profits.

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Question 53

Multiple Choice

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Refer to the accompanying figure to answer the following questions. -This firm would shut down in the long run if the price

Firms in every market structure

If firms in a competitive market are incurring economic losses,we would expect firms to ________ the market,causing the ________ curve to shift to the ________.

Kimiko owns a cupcake shop in Newport Beach,California.The market for cupcakes is very competitive.At Kimiko's current production level,her marginal cost is $25 and her marginal revenue is $29.To maximize profits,Kimiko should

As a firm attempts to expand production,it must ________ the wage it pays to attract additional help.This leads to ________ costs,making the long-run supply curve slope ________.

At current production levels,the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15.The firm should

Draw a perfectly competitive,profit-maximizing firm that is incurring a short-run loss and will shut down.Be sure to include the marginal revenue curve,the marginal cost curve,the average total cost curve,and the average variable cost curve.

Refer to the accompanying table.A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is

Use the following scenario to answer the following questions: Chuck Diesel Burger is a food truck in Houston,Texas.Imagine that Chuck Diesel Burger's minimum average total cost (ATC) is $3.75 and that its minimum average variable cost (AVC) is $2.50.Assume there are no barriers to entrer into or exit from the food-truck market. -Chuck Diesel Burger will shut down if the price is equal to

Use the following scenario to answer the following questions: Carmela's Churros is a perfectly competitive firm that sells desserts in Houston,Texas.Carmela's Churros currently is taking in $40,000 in revenues,and has $15,000 in explicit costs and $25,000 in implicit costs. -Carmela's Churros' economic profits are

In competitive markets

Refer to the accompanying graph to answer the following questions: a.At what price levels would a firm make positive economic profits? b.At what price level would a firm incurring economic losses continue to produce? c.At what price level would a firm break even?

If firms in a competitive market are making positive economic profits,you would expect firms to ________ the market,causing the ________ curve to shift to the ________.

Refer to the accompanying table.A firm participating in a competitive market with these costs would always shut down if the price is

Suppose a perfectly competitive paper firm can produce six tons of paper at an output level where marginal revenue is equal to marginal cost.The price per ton of paper is $100 and the average total cost is $75.What is the total profit or loss that the paper firm is earning?

The city of Tustin,California,has spent $10 million on a project to build a new community college.It will cost the city $40 million to finish the project.When making the decision to continue the project,the city's chief economist tells the city council to ignore the $10 million because

The accompanying table represents the quantity produced,the total revenue,and the total cost of a firm operating in a perfectly competitive market.Refer to this table to answer the following questions. -When profits are maximized,profits are equal to

What is the consequence of a firm in a competitive market selling a homogenous product?