Exam 9: Price Takers and the Competitive Process

Use the figure to answer the following question(s). Figure 9-9 The average total cost ( ATC ) and marginal costs ( MC ) of a firm producing in a price-taker industry are depicted in Figure 9-9. If the current market price of the firm's product is $50, what output should this firm produce per day?

Farmer Fanny sells her crops in a competitive price-taker market. If she produces 500 bushels for total revenue of $2,500 and if harvesting the 501st bushel would raise her total cost from $2,500 to $2,505, her

A firm that must sell its output at a market-determined price is called a

If resource prices rise and the per-unit cost of producing a product increases as the firms in an industry expand output in response to an increase in demand, the long-run market supply curve for the product will

The long-run supply curve is

If a firm is a price taker and wants to earn as much profit as possible, it should expand output

If factor prices rise as demand increases and the firms expand output, the long-run market supply curve will be upward sloping. In terms of economics, this describes

If the demand for pizza falls, pizza suppliers will suffer economic losses, and some firms will leave the industry. Why is this considered good? Shouldn't we feel sorry for these business owners?

In competitive price-taker markets, firms

If a price-taker firm selling in a competitive market offers its product at a higher price than others, it will

Suppose the demand for large (and therefore high-gasoline consumption) cars decreases sharply during an energy crisis. The most likely market adjustment would be

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, it should

Use the figure to answer the following question(s). Figure 9-11 If the current market price for the firm depicted in Figure 9-11 is A , given the firm's cost conditions, which output should it produce?

The figure depicts a firm in a price-taker market. Use this figure to answer the following question(s). Figure 9-19 Refer to Figure 9-19. Given the current market conditions, in the long run,

In general, firms will produce at a rate of output such that marginal revenue equals marginal cost because this output rate will

Consider a firm operating in a competitive price-taker market. The firm is producing 40 units of output, has an average cost of production equal to $5, and is earning $240 economic profit in the short run. What is the current market price?

If price is above average variable cost and below average total cost, a profit-maximizing price taker should

Use the figure to answer the following question(s). Figure 9-8 If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.

The usefulness of the price-taker model requires that the firm's decision makers

Competition as a dynamic process implies that individual firms in a market