Exam 7: Consumer Choice and Elasticity

Figure 7-14 -Refer to Figure 7-14.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 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.Suppose the fixed cost of production rises by $500 and the price per unit is still $8.What happens to the firm's profit-maximising output level?

The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.

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,

All of the following can be used to compute average profit except

Which of the following characteristics of a farmers' market makes it a good example of a perfectly competitive market?

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

Figure 7-2 -Refer to Figure 7-2.What is the amount of profit if the firm produces Q₂ units?

A perfectly competitive apple farm produces 1000 bushels of apples at a total cost of $36 000.The price of each bushel is $50.Calculate the firm's short-run profit or loss.

If total revenue exceeds fixed cost,a firm

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?

In the short run,if price falls below a firm's minimum average total cost,the firm should shut down.

Table 7-2 Arnie sells basketballs in a perfectly competitive market. Table 7-2 summarises Arnie's output per day (Q), total cost (TC), average total cost (ATC) and marginal cost (MC). -Refer to Table 7-2.What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00?

An increase in a firm's fixed cost will not change the firm's profit-maximising output in the short run.

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

If a perfectly competitive firm's total revenue is less than its total variable cost,the firm

If,as a perfectly competitive industry expands,it can supply larger quantities at the same long-run market price,it is

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

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.

An industry's long-run supply curve shows