Exam 9: Perfect Competition

A perfectly competitive market is initially in long-run competitive equilibrium. Then, market demand increases. By the time all adjustments have been made, price will be __________ its original level if the industry is a(n)__________ cost industry.

In long-run competitive equilibrium, firms

Exhibit 22-1 ​ Refer to Exhibit 22-1. The dollar amounts that go in blanks (C)and (D)are, respectively,

Consider the following data: equilibrium price = $40, quantity of output produced = 100 units, average total cost = $47, and average variable cost = $37. What should the firm do and why?

Exhibit 22-3 ​ Refer to Exhibit 22-3. Based upon the information provided in this table, what is the maximum profit this firm can earn?

What is the shape of the demand curve faced by the perfectly competitive firm?  Why does it have this shape?

Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 1,200 units of output. At 1,200 units, ATC is $23, and AVC is $18. The best policy for this firm is to __________ in the short run. Also, this firm earns __________ of __________ if it produces and sells 1,200 units.

Ultimately, market supply curves are upward sloping because of

Equilibrium price is $17 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 275 units of output. At 275 units, ATC is $19, and AVC is $13. The best policy for this firm is to __________ in the short run. Also, total fixed cost equals __________ for this firm.

Why is profit maximized at the level of output where marginal revenue equals marginal cost?

The price charged by a perfectly competitive firm is determined by

Exhibit 22-8 ​ Refer to Exhibit 22-8. What is the total revenue of firm B at profit-maximizing (or loss-minimizing)level of output?

Consider the following data: equilibrium price = $15, quantity of output produced = 10,000 units, average total cost = $12, and average variable cost $7. Given this data, total revenue is __________, total cost is __________, and total fixed cost is __________.

Exhibit 22-10 Refer to Exhibit 22-10.  What is the marginal revenue and marginal cost, respectively, of the 7th unit of output?

A perfectly competitive firm that maximizes profit exhibits resource allocative efficiency because it produces where price

In perfect competition, the firm's marginal revenue curve is

A firm operating in a perfectly competitive market finds itself producing a level of output for which marginal revenue is less than marginal cost. In order to maximize profits (or minimize losses), the firm should

For a price taker, market equilibrium price is $50. At 1,000 units, MR = MC, ATC = $45, and AVC = $30. This price taker will

One of the assumptions upon which the theory of perfect competition is built is that each firm produces and sells a heterogeneous product.

Exhibit 22-6 ​ Refer to Exhibit 22-6. A perfectly competitive firm operating in the market depicted in graph (1)is producing 311 units of output at the profit-maximizing level. What is the marginal revenue of the 312th unit?