Exam 8: Firms in Perfectly Competitive Markets

Figure 8-14 -Refer to Figure 8-14.Which panel best represents the perfectly competitive organic produce market in which organic produce is considered a normal good,and the average income level of consumers is rising?

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

Perfect competition is characterised by all of the following except

Figure 8-5 Figure 8-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 8-5.The firm's manager suggests that the firm's goal should be to maximise average profit.In that case,what is the output level and what is the average profit that will achieve the manager's goal?

Which of the following is a characteristic of an oligopolistic market structure?

If the market price is $40,the average revenue of selling five units is

What assumptions are necessary for a market to be perfectly competitive? Explain why each of these assumptions is important.

What is allocative efficiency?

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

Figure 8-5 Figure 8-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 8-5.If the firm's fixed cost increases by $1000 due to a new environmental regulation,what happens in the diagram above?

Which of the following statements is true?

In a decreasing-cost industry,the entry of new firms lowers average cost at each level of output.

Which of the following is a characteristic of a monopoly?

How are sunk costs and fixed costs related?

Figure 8-3 -Refer to Figure 8-3.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimising quantity.Identify the area that represents the loss.

In August 2008,Ethan Nicholas developed the iShoot application 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,

If,for a given output level,a perfectly competitive firm's price is less than its average variable cost,the firm

A perfectly competitive wheat farmer in a constant-cost industry produces 1000 bushels of wheat at a total cost of $50 000.The prevailing market price is $48.What will happen to the market price of wheat in the long run?

Figure 8-14 -Refer to Figure 8-14.Which panel best represents the perfectly competitive organic produce market in which some firms are earning short-run economic profits,and the Surgeon General announces that switching from nonorganic produce to organic produce will add 5 years to the average life span of consumers?