Exam 12: Firms in Perfectly Competitive Markets

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?

A perfectly competitive firm faces a demand curve that is

Being a price taker, a perfectly competitive firm cannot receive a producer surplus in the short run.

Both buyers and sellers are price takers in a perfectly competitive market because

Why would a company continue to operate for many years while never once turning a profit rather than shut down immediately? Using revenue and cost analysis, explain when the company would shut down.

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30 and if the firm is producing output, what is the amount of its total variable cost?

What is meant by the term "long-run competitive equilibrium"?

Which of the following statements is correct?

How are market price, average revenue, and marginal revenue related for a perfectly competitive firm and why?

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.The figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens to its profit-maximizing output level?

What is allocative efficiency?

Figure 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-9.Identify the short-run shutdown point for the firm.

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run.Which of the following is one reason for this?

Figure 12-2 -Refer to Figure 12-2.Suppose the firm is currently producing Q₂ units.What happens if it expands output to Q₃ units?

For a firm in a perfectly competitive market, price is

In August 2008, Ethan Nicholas developed the iShoot app for the Apple iPhone 3G, and within five months had earned $800,000 from this program.By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales.This example indicates that in a competitive market,

Which of the following is not a characteristic of a monopolistically competitive market structure?

Figure 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-9.At price P₂, the firm would

The price of a seller's product in perfect competition is determined by

Figure 12-2 -Refer to Figure 12-2.Why is the total revenue curve a ray from the origin?