Exam 14: Firms in Competitive Markets

Table 14-5 Suppose that a firm in a competitive market faces the following revenues and costs: ​ Quantity (Units) Marginal Cost (Dollars) Marginal Revenue (Dollars) 12 5 7 13 6 7 14 7 7 15 8 7 16 9 7 17 10 7 -Refer to Table 14-5. If the firm is maximizing profit, how much profit is it earning?

​For firms operating in a perfectly competitive market, price must always be greater than marginal revenue.

A competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will

News reports from the western United States occasionally report incidents of cattle ranchers slaughtering a large number of newborn calves and burying them in mass graves rather than transporting them to markets. Assuming that this is rational behavior by profit-maximizing "firms," explain what economic factors may influence such behavior.

For any competitive market, the supply curve is closely related to the

A golf course in Fargo, North Dakota - where it is very cold in the winter - is closed between November 1 and April 1. If the owner of the golf course is rational, what criterion does he or she use in deciding to close the course for this extended period of time?

Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70. What would you advise Mr. Raiman to do?

A dairy farmer must be able to calculate sunk costs in order to determine how much revenue the farm receives for the typical gallon of milk.

What name do economists have for a cost that has already been committed and cannot be recovered?

"The water that comes out of your faucets at home is not supplied by a competitive firm." Explain why this statement is correct.

Figure 14-7 ​ -Refer to Figure 14-7. When the market is in long-run equilibrium at point W in graph (b), the firm represented in graph (a) will

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: ​ -Refer to Figure 14-1. If the market price is exactly $13, the firm will earn

In a competitive market, is the long-run supply curve typically more elastic than the short-run supply curve, or is it less elastic than the short-run supply curve?

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: ​ -Refer to Figure 14-1. The firm will earn a negative economic profit but remain in business in the short run if the market price is

For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal.

Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price.

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

Profit-maximizing firms enter a competitive market when existing firms in that market have

Table 14-2 The table represents a demand curve faced by a firm in a competitive market. ​ ​ Price (Dollarsper unit) Quantity Demanded (Units) 5 0 5 1 5 2 5 3 5 4 5 5 -Refer to Table 14-2. For this firm, the marginal revenue from selling the next unit is

Because there are many sellers in a competitive market, individual firms are unable to maximize profits.