Exam 7: Consumer Choice and Elasticity

A perfectly competitive firm produces 3000 units of a good at a total cost of $36 000.The fixed cost of production is $20 000.The price of each good is $10.Should the firm continue to produce in the short run?

If a perfectly competitive firm's price is above its average total cost,the firm

Assume the market for organically-grown produce is perfectly competitive.All else being equal,as farmers find it less profitable to produce and sell organic produce in this market,

What is always true at the quantity where a firm's average total cost equals average revenue?

Figure 7-6 -Refer to Figure 7-6.Suppose the firm produces 4000 units.What does the shaded area labelled B represent?

A constant-cost,perfectly competitive market is in long-run equilibrium.At present,there are 1000 firms each producing 400 units of output.The price of the good is $60.Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $64.In the new long-run equilibrium,how will the average total cost of producing the good compare to what it was before the price of the good rose?

Which of the following statements is correct?

Allocative efficiency is achieved in an industry when firms supply those goods and services that provide consumers with a marginal benefit equal to the marginal cost of producing those goods and services.

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Figure 7-8 -Refer to Figure 7-8.Total revenue at the profit-maximising level of output is

If,for the last bushel of apples produced and sold by an apple farm,marginal revenue exceeds marginal cost,then in producing that bushel the farm

For a perfectly competitive firm,average revenue is equal to

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

In the short run,a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

In the short run,a firm might choose to produce rather than shut down even if its market price is less than its average total cost of production.

For a given quantity,the total profit of a perfectly competitive firm is equal to the vertical distance between the firm's total revenue curve and its total cost curve.

Figure 7-8 -Refer to Figure 7-8.The total cost at the profit-maximising output level equals

A perfectly competitive firm produces 3000 units of a good at a total cost of $36 000.The price of each good is $10.Calculate the firm's short-run profit or loss.

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximise its profit?

Which of the following is a characteristic of a monopoly?