FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Perfect Competition and the Supply Curve

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 171

Multiple Choice

Review LaterAdd Note

Review Later

A firm's shut-down point is the minimum value of:

A) total cost.
B) average variable cost.
C) average total cost.
D) marginal cost.

E) B) and D)
F) A) and B)

Correct Answer

verified

Show Answer

Question 172

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is MOST likely to cause firms to exit a perfectly competitive industry?

A) Consumer tastes and preferences for this product get stronger.
B) A technological advance allows all firms to produce more efficiently.
C) The price of a key variable input falls.
D) Consumer income falls.

E) A) and C)
F) C) and D)

Correct Answer

verified

Show Answer

Question 173

Multiple Choice

Review LaterAdd Note

People in the eastern part of Beirut are prevented by border guards from traveling to the western part of Beirut to shop for or sell food. This situation violates the perfect competition assumption of:

The market for beef is in long-run equilibrium at $3.25 per pound. The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply, and the price falls to $2.00 per pound. If the long-run supply curve is horizontal, when the long-run equilibrium is reestablished, the price will be:

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The lowest price that will yield zero economic profit is indicated by the letter:

In perfect competition, the assumption of easy entry and exit implies that in the _____ run all firms in the industry will earn _____ economic profits.

Use the following to answer questions: Figure: Game-Day Shirts -(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the price of a shirt is $9, in the long run:

In the model of perfect competition:

For a firm producing at any level of output LOWER THAN the most profitable one, an increase in output adds:

Hank operates a perfectly competitive firm in the long run. For several periods the market price has been $20, and his break-even price is $22. Given the chance to change his fixed costs, Hank should:

State and explain the price-taking firm's optimal output rule.

The short-run shut-down price is:

The slope of the total cost curve is:

A perfectly competitive firm will incur an economic loss but will continue to produce a positive quantity of output in the short run if the price is:

In the long run, when economic profit is zero, firms leave the industry, which will increase the market supply and price until economic profits are positive.

Economic profits in a perfectly competitive industry encourage firms to _____ the industry, and losses encourage firms to _____ the industry.

Use the following to answer questions: Figure: Costs and Profits for Tomato Producers -(Figure: Costs and Profits for Tomato Producers) Look at the figure Costs and Profits for Tomato Producers. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. If the market price falls to $16, the farmer's marginal revenue _____ and the profit-maximizing output _____.

When a perfectly competitive firm is in long-run equilibrium, the firm is producing at _____ cost.

Use the following to answer questions: -(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During the winter, Alexa runs a snow-clearing service in a perfectly competitive industry. Assume that costs are constant in each interval; that is, the variable cost of clearing anywhere from 1 through 10 lots is $200. Her only fixed cost is $1,000 for a snowplow. Her variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $30, what is Alexa's profit at the optimal output?

Explain how the long-run perfectly competitive equilibrium is efficient.