Exam 8: Firms in Perfectly Competitive Markets

A very large number of small sellers who sell identical products imply

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit,then

Figure 8-10 -Refer to Figure 8-10.Consider a typical firm in a perfectly competitive industry that makes short-run profits.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21.Which of the following will happen?

Figure 8-13 -Refer to Figure 8-13.Suppose a typical firm in a perfectly competitive market is earning economic profits in the short run.Which of the diagrams in the figure depicts what happens in the industry as it transitions to a long-run equilibrium?

Figure 8-14 -Refer to Figure 8-14.Which panel best represents the perfectly competitive organic produce market's transition to the long run when some firms in the market are earning economic profits?

Table 8-1 Table 8-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units. -Refer to Table 8-1.The firm will not produce in the short run if the output price falls below

Maximising average profit is equivalent to maximising total profit.

A firm will break even when

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?

In an increasing-cost industry,the long-run supply curve is upward sloping.

For a perfectly competitive firm,at the profit-maximising output,average revenue equals marginal cost.

If the market price is $25,the average revenue of selling five units is

Using two graphs,illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market.On the first graph,use a supply and demand graph to illustrate the positive technological change.On the second graph,use demand,ATC,MC and MR curves to illustrate the elimination of economic profit resulting from the positive technological change.Explain what is taking place in each graph.

For a firm in a perfectly competitive market,price is

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

The short-run supply curve for a perfectly competitive firm is that part of the firm's marginal cost curve that lies above the minimum point of its average variable cost curve.

Figure 8-7 Figure 8-7 shows cost and demand curves facing a profit-maximising,perfectly competitive firm. -Refer to Figure 8-7.At price P₂,the firm would produce

Assume that the tuna fishing industry is perfectly competitive.Which of the following best characterises the industry if,as demand for tuna increases,fishing boats have to go farther into the ocean to harvest tuna?