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Exam 12: Perfect Competition and the Supply Curve

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Question 121

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Use the following to answer questions : $\begin{array}{l}\text { Table: Cherry Farm }\\\begin{array} { c c } \hline \begin{array} { l } \text { Quantity of } \\\text { cherries } \\\text { (in pounds) }\end{array} & \text { Total Cost } \\\hline 0 & \$ 2 \\1 & 7 \\2 & 11 \\3 & 13 \\4 & 16 \\5 & 21 \\6 & 28 \\7 & 38 \\\hline\end{array}\end{array}$ -(Table: Cherry Farm) Use Table: Cherry Farm.If Hank and Helen have one of the 100 farms in the perfectly competitive cherry industry,and if the price is $5,in the short run,the industry will supply _____ kilograms.

A) 100
B) 200
C) 400
D) 500

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Question 122

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A perfectly competitive firm will maximize profits when:

A) marginal revenue equals marginal cost.
B) marginal revenue is lower than average variable cost.
C) price is lower than marginal cost.
D) price is higher than marginal cost.

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Question 123

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Use the following to answer questions : $\text {Table: Total Cost for a Perfectly }$ $\text {Competitive Firm}$ $\begin{array}{lc}\hline \begin{array}{l}\text { Quantity } \\\text { per Period }\end{array} & \text { Total Cost } \\\hline 0 & \$ 10 \\1 & 16 \\2 & 20 \\3 & 22 \\4 & 24 \\5 & 25 \\6 & 27 \\7 & 30 \\8 & 34 \\9 & 39 \\10 & 45 \\\hline\end{array}$ -(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50,the profit-maximizing output is _____ units.

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the typical firm is likely to:

A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

Use the following to answer questions : $\text {Table: Total Cost for a Perfectly }$ $\text {Competitive Firm}$ $\begin{array}{lc}\hline \begin{array}{l}\text { Quantity } \\\text { per Period }\end{array} & \text { Total Cost } \\\hline 0 & \$ 10 \\1 & 16 \\2 & 20 \\3 & 22 \\4 & 24 \\5 & 25 \\6 & 27 \\7 & 30 \\8 & 34 \\9 & 39 \\10 & 45 \\\hline\end{array}$ -(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50,the profit-maximizing quantity of output is:

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

Use the following to answer questions : $\begin{array}{l}\text { Table: Soybean Cost }\\\begin{array} { l c } \hline \begin{array} { l } \text { Quantity } \\\text { of Soybeans } \\\text { (bushels) }\end{array} & \begin{array} { c } \text { Total Cost } \\( T C ) \end{array} \\\hline 0 & 12 \\1 & 26 \\2 & 33 \\3 & 42 \\4 & 54 \\5 & 69 \\6 & 84 \\7 & 104 \\\hline\end{array}\end{array}$ -(Table: Soybean Cost) Use Table: Soybean Cost.What is the break-even price for this farmer?

Use the following to answer questions : $\text {Table: Total Cost for a Perfectly }$ $\text {Competitive Firm}$ $\begin{array}{lc}\hline \begin{array}{l}\text { Quantity } \\\text { per Period }\end{array} & \text { Total Cost } \\\hline 0 & \$ 10 \\1 & 16 \\2 & 20 \\3 & 22 \\4 & 24 \\5 & 25 \\6 & 27 \\7 & 30 \\8 & 34 \\9 & 39 \\10 & 45 \\\hline\end{array}$ -(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:

A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run _____ curve.

Use the following to answer questions : $\text { Table: Lilly's Apple Orchard }$ $\begin{array}{lr}\hline \begin{array}{l}\text { Quantity } \\\text { of Apples } \\\text { (bushels) }\end{array} &{\boldsymbol{VC}} \\\hline 0 & \$ 0 \\1 & 40 \\2 & 70 \\3 & 80 \\4 & 130 \\5 & 190 \\6 & 260 \\7 & 340 \\8 & 430 \\\hline\end{array}$ -(Table: Lilly's Apple Orchard) Use Table: Lilly's Apple Orchard.Lilly is the price-taking owner of an apple orchard.Her orchard has fixed costs of $30.If the price of a kilogram of apples is $25,how many kilograms will Lilly produce to maximize profit?

The marginal revenue received by a firm in a perfectly competitive market:

Use the following to answer questions : $\begin{array}{l}\text { Table: Soybean Cost }\\\begin{array} { l c } \hline \begin{array} { l } \text { Quantity } \\\text { of Soybeans } \\\text { (bushels) }\end{array} & \begin{array} { c } \text { Total Cost } \\( T C ) \end{array} \\\hline 0 & 12 \\1 & 26 \\2 & 33 \\3 & 42 \\4 & 54 \\5 & 69 \\6 & 84 \\7 & 104 \\\hline\end{array}\end{array}$ -(Table: Soybean Cost) Use Table: Soybean Cost.If the market price of a kilogram of soybeans is $15,what will be the farmer's short-run profit at the optimal level of production?

A firm's total output times the price at which it sells that output is _____ revenue.

If firms are taking economic losses in the short run,then in the long run,firms will leave the industry,industry output will _____,and economic losses will _____.

A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if the price is:

If a perfectly competitive firm reduces its output,the market price will increase.

Markets for new drugs are not usually perfectly competitive since the companies that manufacture these drugs are usually granted patents,restricting entry into the industry.

In perfect competition,_____ are _____,and _____ are price-takers.

Perfect competition is characterized by: