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Exam 8: Perfect Competition

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Question 31

Multiple Choice

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Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

A) 100.
B) 1,000.
C) 10,000.
D) 18,000.

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

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Question 32

Multiple Choice

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Exhibit 8-12 Marginal revenue and cost per unit curves -As shown in Exhibit 8-12, if the price is OD, the firm's total revenue at its most profitable level of output is:

A) OZID.
B) OYHD.
C) OXLD.
D) OYFB.

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

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Question 33

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In the short run, a firm should shut down if its economic loss from operating exceeds its total fixed cost.

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

Exhibit 8-12 Marginal revenue and cost per unit curves -The firm shown in Exhibit 8-12 will:

A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500. From this, she can determine:

A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:

The price-taker firm should discontinue production immediately if:

Exhibit 8-13 Price and cost per unit curves -In Exhibit 8-13, if the price is P₃, total economic profit is maximized or economic loss minimized at the output:

In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Exhibit 8-2 Total revenue and total cost graph -At an output of 250 units, as shown in Exhibit 8-2, marginal cost is:

If marginal revenue exceeds marginal cost in the short run, total revenue for the perfectly competitive firm is greater than total cost.

The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.

Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line. ​

The most profitable output level can be found by looking at which two curves?

If a perfectly competitive industry's long-run supply curve is downward sloping, we can conclude that input prices will:

In long-run equilibrium for a perfectly competitive firm, price equals which of the following?

Exhibit 8-3 Cost per unit curves -As shown in Exhibit 8-3, if the product price is either $1.00, $1.50, $2.00, or $4.00, the firm's economic profit is maximum at an output of:

Exhibit 8-10 Price and cost data for a firm $\begin{array} { | c | c | c | c | c | } \hline \text { Q } & \text { P } & \text { AVC } & \text { ATC } & \text { MC } \\\hline 0 & \$ 12 & - & - & - \\1 & 12 & 3 & 5 & 5 \\2 & 12 & 5 & 6 & 7 \\3 & 12 & 7.3 & 8 & 12 \\4 & 12 & 9.5 & 10 & 16 \\\hline\end{array}$ -In Exhibit 8-10, the maximum possible total profit is:

In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.