Exam 8: Firms in Perfectly Competitive Markets

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows: Suppose the current equilibrium price in the teapot market is $15.To maximise profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

A teenaged babysitter is similar to a firm in a perfectly competitive industry in that,for both,

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 market price is $20,what is the amount of the firm's profit?

In perfect competition

In the short run,a firm that is operating at a loss has two options.These options are

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

If productive efficiency characterises a market,

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.If the market price of each camera case is $8,what is the firm's total revenue?

When firms exit a perfectly competitive industry,the market supply curve shifts to the left.

Figure 8-9 -Refer to Figure 8-9.Suppose the prevailing price is $20 and the firm is currently producing 1350 units.In the long-run equilibrium

Figure 8-11 -Refer to Figure 8-11.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

In the long run,perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long run they will not earn any profit?

If a firm shuts down in the short run,

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows: Suppose the current equilibrium price in the teapot market is $20.To maximise profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

Table 8-3 Arnie sells basketballs in a perfectly competitive market.Table 8-3 summarises Arnie's output per day (Q),total cost (TC),average total cost (ATC)and marginal cost (MC). -Refer to Table 8-3.What price (P)will Arnie charge and how much profit will he earn if the market price of basketballs is $12.50?

If,for a perfectly competitive firm,price exceeds the marginal cost of production,the firm should

Perfectly competitive industries tend to produce low-priced,low-technology products.

A perfectly competitive firm faces a demand curve that is

Figure 8-7 Figure 8-7 shows cost and demand curves facing a profit-maximising,perfectly competitive firm. -Refer to Figure 8-7.Identify the firm's short-run supply curve.

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product,the firm will be able to earn economic profits in the long run.