Exam 9: Aggregate Demand

Suppose a perfectly competitive firm is experiencing zero economic profits. In an effort to increase profits, the firm decides to initiate an advertising campaign for its product. The most likely short-run result of this campaign, ceteris paribus, would be

As in other industries, the market structure of the computer industry has evolved over time. It began as a monopoly and then became perfectly competitive.

A perfectly competitive market results in efficiency because

Perfectly competitive firms are heavy advertisers because they produce differentiated products.

Profit per unit is equal to

Because a perfectly competitive firm has no market power, its marginal cost curve is flat (i.e., horizontal).

The price signal the consumer gets in a competitive market

Marginal cost pricing in competitive markets results in all but which one of the following?

The exit of firms from a market, ceteris paribus,

A competitive market creates strong pressure for technological innovation that

High profits in a particular industry indicate that

In a perfectly competitive industry, economic profit

Barriers to entry are obstacles that make it difficult or impossible for would-be producers to enter a particular market.

Explain how the market supply curve is derived in a perfectly competitive market. Identify five factors that would cause the market supply curve to shift.

The "Tablet Brigade" In the News article indicates that the success of the iPad

Refer to Figure 23.5 for a perfectly competitive firm. If more efficient production techniques were developed in this market, which of the following changes would we expect to occur, ceteris paribus?

A firm should shut down production when

Other things being equal, as more firms enter a market, the market supply curve

Perfectly competitive firms cannot individually affect market price because

When a firm is earning positive economic profits, this is an indication that the firm