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Exam 14: Firms in Competitive Markets

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Question 51

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The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average

A) fixed cost.
B) variable cost.
C) total cost.
D) revenue.

E) A) and C)
F) All of the above

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Question 52

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When a competitive firm produces and sells 600 units of output, its total revenue is $35,970. What is the firm's total revenue when it produces and sells 620 units of output?

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The price (average revenue) is...

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Question 53

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Table 14-1 ​ ​ $\begin{array} { | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Units) }\end{array} \\\hline 5 & 0 \\\hline 5 & 2 \\\hline 5 & 4 \\\hline 5 & 6 \\\hline 5 & 8 \\\hline 5 & 10 \\\hline 5 & 12 \\\hline 5 & 14 \\\hline 5 & 16 \\\hline 5 & 18 \\\hline\end{array}$ -Refer to Table 14-1. If the firm doubles its output from 6 to 12 units, total revenue will

When buyers in a competitive market take the selling price as given, they are said to be

Table 14-4 The following table presents cost and revenue information for a firm operating in a competitive industry. ​ ​ -Refer to Table 14-4. What is the total revenue from selling 4 units?

A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average total cost but greater than the firm's average variable cost.

Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market?

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: ​ -Refer to Figure 14-2. If the market price is $6, what is the firm's short-run economic profit?

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Suppose a firm in a competitive market increases its output by 25 percent. As a result, the price of its output is likely to

​A ski resort will choose to remain open in the summer whenever its fixed costs are low enough.

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. When market price is P₂, a profit-maximizing firm's losses can be represented by the area

Which of the following firms is the closest to being a perfectly competitive firm?

Table 14-1 ​ ​ $\begin{array} { | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Units) }\end{array} \\\hline 5 & 0 \\\hline 5 & 2 \\\hline 5 & 4 \\\hline 5 & 6 \\\hline 5 & 8 \\\hline 5 & 10 \\\hline 5 & 12 \\\hline 5 & 14 \\\hline 5 & 16 \\\hline 5 & 18 \\\hline\end{array}$ -Refer to Table 14-1. Over what range of output is marginal revenue declining?

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: ​ -Refer to Figure 14-1. If the market price is $12, the firm will earn

A competitive market will typically experience entry and exit until accounting profits are zero.

Scenario 14-2 The information below applies to a competitive firm that sells its output for $45 per unit. • When the firm produces and sells 120 units of output, its average total cost is $23.5. • When the firm produces and sells 121 units of output, its average total cost is $23.65. -Refer to Scenario 14-2. Let Q represent the quantity of output. Which of the following magnitudes has the same value at Q = 120 and at Q = 121?

In a certain market there are many buyers and many sellers. It is easy to distinguish the product sold by one firm from the products sold by other firms. Is the market competitive?

When marginal revenue equals marginal cost, the firm

Table 14-6 Suppose that a firm in a competitive market faces the following revenues and costs: ​ ​ $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Total Revenue } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (Dollars) }\end{array} \\\hline 0 & 0 & 3 \\\hline 1 & 6 & 5 \\\hline 2 & 12 & 8 \\\hline 3 & 18 & 12 \\\hline 4 & 24 & 17 \\\hline 5 & 30 & 23 \\\hline 6 & 36 & 30 \\\hline 7 & 42 & 38 \\\hline\end{array}$ ​ -Refer to Table 14-6. The firm should not produce an output level beyond