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Exam 12: Firms in Perfectly Competitive Markets

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Question 101

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Figure 12-13 -Refer to Figure 12-13.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

A) it will reduce its output to Q0 and face a price of P0.
B) it will continue to produce Q1 but faces the higher price of P2.
C) it will expand its output to Q2 and face a price of P2.
D) it will expand its output to Q3 and face a price of P1.

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Question 102

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For a perfectly competitive firm,average revenue is equal to

A) marginal cost.
B) the market price.
C) total revenue.
D) average fixed cost.

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Question 103

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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.

A constant-cost,perfectly competitive market is in long-run equilibrium.At present,there are 1,000 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?

Perfectly competitive industries tend to produce low-priced,low-technology products.

Article Summary According to the Department of Agriculture,net farm income will fall from $91.1 billion in 2014 to $58.3 billion in 2015,a 36 percent drop and the largest percentage decline since 1983.Falling prices on corn and soybeans are responsible for a portion of the decline in income,as are lower prices for dairy products,hogs,and chickens.The USDA is,however,predicting lower production costs due to falling prices for energy,seed,fertilizer,and pesticides. -Refer to the Article Summary.Assume that after the record decline in U.S.farm income in 2015,farmers are expected to break even in 2016.This means that at the quantity being produced in 2016

The price of a seller's product in perfect competition is determined by

A wheat farmer and a firm in a perfectly competitive market are similar in that

Letters are used to represent the terms used to answer this question: price (P) ,quantity of output (Q) ,total cost (TC) and average total cost (ATC) .Which of the following equations is equal to a firm's average profit?

A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue curve and total cost curve is the largest.This is the same rate of output where

Assume that the tuna fishing industry is perfectly competitive.Which of the following best characterizes the industry if,as demand for tuna increases,fishing boats have to go farther into the ocean to harvest tuna?

For a firm in a perfectly competitive market,price is

Mark Frost grows apples in a perfectly competitive market.If we drew a line in a graph that illustrates Mark's total revenue from selling apples,it would be

Producing where marginal revenue equals marginal cost is equivalent to producing where

Apple introduced its iPhone 3G in July 2008 and within a month sales had topped 3 million units.By April 2009,more than 25,000 apps for the iPhone 3G were available in the iTunes store,an indication that in a competitive market

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 12-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens in the diagram above?

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000.The prevailing market price is $15.What will happen to the market price of wheat in the long run?

Figure 12-10 -Refer to Figure 12-10.The total cost at the profit-maximizing output level equals

Which of the following is a characteristic of a monopoly?

Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why. a.Restaurants b.Corn c.College education d.Local radio and television