Exam 8: Supply in a Competitive Market

Use the following to answer question: Figure 8.16 -(Figure 8.16) Which panel shows a representative firm (operating in a perfectly competitive industry) in a long-run equilibrium?

Use the following to answer question: Table 8.1 -(Table 8.1) The level of output where marginal revenue equals marginal cost is:

Which of the following characteristics relate(s) to perfect competition?

Use the following to answer question: Figure 8.14 -(Figure 8.14) In this perfectly competitive industry, there are 100 firms with a short-run supply curve represented by S₁ and 50 firms with a short-run supply curve represented by S₂. At a market price of $4.50, industry output is:

Answer the following questions.

Use the following to answer question: Figure 8.1 -(Figure 8.1) Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 8.8 -(Figure 8.8) Which of the following statements is (are) TRUE?

Suppose that each firm in a perfectly competitive market has a short-run total cost of TC = 75 + 500Q - 5Q² + 0.5Q³, where MC = 500 - 10Q + 1.5Q².

The perfectly competitive firm's short-run supply curve is:

Marginal cost can be calculated as:

Use the following to answer question: Figure 8.26 -(Figure 8.26) The graph shows a perfectly competitive industry in long-run equilibrium. The price is _____. If technology lowers production costs by an average of 50%, the new long-run equilibrium price will be _____.

Suppose that the market for painting services is perfectly competitive. Painting companies are identical; their long-run cost functions are given by . Market demand is . a. Find the long-run equilibrium price in this industry. b. Use market demand to find the equilibrium total industry output. c. Find the equilibrium number of firms.

Stu owns an ice cream parlor that is usually closed during the winter. This winter, however, Stu is considering opening his business in February instead of March. If Stu opens his store in February, he will earn total revenue of $4,000 for the month, incurring variable costs of $3,500 and fixed costs of $1,500. If the store remains closed during February, Stu will earn no revenues and incur fixed costs of $1,500. Stu should:

Use the following to answer question: Figure 8.18 -(Figure 8.18) Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 8.20 -(Figure 8.20) What is TRUE about the slopes of the total revenue and total cost curves at the firm's profit-maximizing output level? What is the actual slope of the total revenue curve at the profit-maximizing output level? What is the firm's marginal cost at the profit-maximizing output level?

Suppose that a perfectly competitive firm's AVC curve is given by AVC = WQ, and its marginal cost curve is given by MC = 2WQ, where W is the wage rate.

In a perfectly competitive industry, the long-run equilibrium price is $12. If a technological innovation lowers production costs, the long-run equilibrium price will:

Suppose that demand increases. If the total cost curves for the firms do not change with the number of firms:

Suppose that the market for ice cream sandwiches is perfectly competitive. Firms that produce ice cream sandwiches are identical; their long-run cost functions are given by . Market demand is . a. Find the long-run equilibrium price in this industry. b. Use market demand to find the equilibrium total industry output. c. Find the equilibrium number of firms.

Which of the following statements is (are) TRUE?