Exam 7: Consumer Choice and Elasticity

Figure 7-12 -Refer to Figure 7-12.Consider a typical firm in a perfectly competitive industry which is incurring short-run losses.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

Table 7-1 Table 7-1 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 7-1.If the market price of each camera case is $8 and the firm maximises profit,what is the amount of the firm's profit or loss?

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.

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?

Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $12.Which of the following will happen?

Maximising average profit is equivalent to maximising total profit.

Which of the following is the best example of a perfectly competitive industry?

A perfectly competitive firm's supply curve is its

Figure 7-8 -Refer to Figure 7-8.The firm's short-run supply curve is its

The perfectly competitive market structure benefits consumers because

If a firm shuts down in the short run,

Marty's Bird House suffers a short-run loss.Marty can reduce his loss below the amount of his total fixed costs by continuing to produce if his revenue

If a perfectly competitive firm achieves productive efficiency,then

A firm will make a profit when

In early 2007,Pioneer and JVC,two Japanese electronics firms,each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets.Which of the following could explain why these firms did not simply raise their prices and increase their profits?

A perfectly competitive firm faces a demand curve that is

Consider the market for wheat which is a perfectly competitive market.Is the market demand curve the same as the demand curve facing an individual producer? If not,explain how and why they are different? Illustrate your answer graphically.

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

Figure 7-8 -Refer to Figure 7-8.At the profit-maximising output level,the firm earns

Assume that firms in a perfectly competitive market are earning economic profits.Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?