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Exam 12: Firms in Perfectly Competitive Markets

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Question 101

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Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why. a.Restaurants b.Corn c.College education d.Local radio and television

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a.Restaurants are not perfectly competit...

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Question 102

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Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 12-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens in the diagram above?

A) All the cost curves shift upward.
B) Only the average variable cost and average total cost curves shift upward;marginal cost is not affected.
C) Only the average total cost curve shifts upward;the marginal cost and average variable cost curves are not affected.
D) None of the curves shifts;only the fixed cost curve,which is not shown here,is affected.

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Question 103

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Article Summary According to the Department of Agriculture,net farm income will fall from $91.1 billion in 2014 to $58.3 billion in 2015,a 36 percent drop and the largest percentage decline since 1983.Falling prices on corn and soybeans are responsible for a portion of the decline in income,as are lower prices for dairy products,hogs,and chickens.The USDA is,however,predicting lower production costs due to falling prices for energy,seed,fertilizer,and pesticides. -Refer to the Article Summary.Assume that after the record decline in U.S.farm income in 2015,farmers are expected to break even in 2016.This means that at the quantity being produced in 2016

Producing where marginal revenue equals marginal cost is equivalent to producing where

A constant-cost,perfectly competitive market is in long-run equilibrium.At present,there are 1,000 firms each producing 400 units of output.The price of the good is $60.Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $64.In the new long-run equilibrium,how will the average total cost of producing the good compare to what it was before the price of the good rose?

Assume that the tuna fishing industry is perfectly competitive.Which of the following best characterizes the industry if,as demand for tuna increases,fishing boats have to go farther into the ocean to harvest tuna?

Figure 12-10 -Refer to Figure 12-10.The total cost at the profit-maximizing output level equals

Letters are used to represent the terms used to answer this question: price (P) ,quantity of output (Q) ,total cost (TC) and average total cost (ATC) .Which of the following equations is equal to a firm's average profit?

Figure 12-13 -Refer to Figure 12-13.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

For a firm in a perfectly competitive market,price is

A wheat farmer and a firm in a perfectly competitive market are similar in that

Which of the following is a characteristic of a monopoly?

A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue curve and total cost curve is the largest.This is the same rate of output where

The price of a seller's product in perfect competition is determined by

For a given quantity,the total profit of a perfectly competitive firm is equal to the vertical distance between the firm's total revenue curve and its total cost curve.

Mark Frost grows apples in a perfectly competitive market.If we drew a line in a graph that illustrates Mark's total revenue from selling apples,it would be

For a perfectly competitive firm,average revenue is equal to

Perfectly competitive industries tend to produce low-priced,low-technology products.

Apple introduced its iPhone 3G in July 2008 and within a month sales had topped 3 million units.By April 2009,more than 25,000 apps for the iPhone 3G were available in the iTunes store,an indication that in a competitive market

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000.The prevailing market price is $15.What will happen to the market price of wheat in the long run?