Exam 8: The Theory of Perfect Competition

Suppose that short- run SMC = 10 + 2Q for an individual firm in a competitive market. If there are 100 identical firms in this market, then the short- run supply curve can be written as:

In the short run a firm in a competitive market will produce nothing when:

There are 100 identical demanders of product y, and the demand function for each individual is y = 10 - p. The production function for any firm is y = min(z₁,z₂). If the industry were to produce 700 units of y, then aggregate requirements would be:

In the short- run, a competitive firm will produce some output even though its profit is negative if:

A competitive firm's short run supply curve is its:

In short run competitive equilibrium:

In a constant cost industry:

Suppose that TC = 2Q³ - 18Q² + 100Q + 50. If price, P, equals 100, the firm's maximum profit is:

Which of the following is not an assumption of the perfectly competitive model?

The aggregate demand curve is the:

There are 100 identical demanders of product y, and the demand function for each individual is y = 10 - p. The production function for any firm is y = min(z₁,z₂). The market demand function is:

Suppose that TC = 2Q³ - 18Q² + 100Q + 50. If the market price is 32, how much output will the firm produce to maximize profit?

Since a perfectly competitive firm is assumed to be a price- taker:

A firm has total cost given by TC = q³ - 20q² + 200q + 576. Suppose the firm faces a marginal revenue curve given by P = 200. i)What is the optimal quantity for this firm to produce? ii)Calculate the firm's profit, fixed cost, and variable cost if it produces 12 units of output? iii)What effect would each of the following have on MC? a)The price of the variable input decreases. b)The price of the fixed input increases. c)A technological improvement increases the returns to scale of the production process.

Andrew's demand for fish is: Q_A=12- 3P. Betty's demand for fish is: Q_B=16- 4P and Cathy's demand for fish is: Q_C=20- 5P. Q is the number of pounds of fish and P is the price of fish per pound. If Andrew, Betty and Cathy are the only people living in their village, what is the total market demand for fish in the village?

The long- run supply curve for a competitive industry shows:

Suppose the total cost to produce quantity q is TC(q)= 250 + q²/10. If this firm is a price- taker and the market price is p = 10, then the firm's total cost will be:

. Suppose the market demand for fish is: Q=1- P, and the supply of fish is Q=- 2+P, where P is the price per pound of fish. The quantity traded in this market is:

A competitive firm:

In long run equilibrium: