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Exam 22: The Competitive Firm

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Question 21

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-Refer to Figure 22.3 for a perfectly competitive firm.If the market price is $10,

A) The firm should produce 31 units.
B) The firm will shut down in the short run.
C) An economic loss will occur.

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Question 22

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When technology improves,the firm's marginal cost curve shifts

A) Upward,and supply increases.
B) Downward,and supply increases.
C) Upward,and supply decreases.

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Question 23

Multiple Choice

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An In the News article discusses "T-Shirt Shop Owner's Lament: Too Many T-Shirt Shops." If T-shirt shops are perfectly competitive firms,then

Economic profit is zero when a firm's revenues just cover its economic cost.

If a business owner uses a warehouse he owns to store his inventory,then his total costs will be less than if he rented warehouse space from someone else.

Which of the following does not affect marginal costs?

Entrepreneurship

When price exceeds average variable cost but not average total cost,the firm should,in the short run,

Assuming the entrepreneur does not pay herself,the $1,000 she could earn as an employee elsewhere is considered

Suppose a firm has an annual budget of $200,000 in wages and salaries,$75,000 in materials,$30,000 in new equipment,$20,000 in rented property,and $35,000 in interest costs on capital.The owner/manager does not choose to pay himself,but he could receive income of $90,000 by working elsewhere.The firm earns revenues of $360,000 per year. What are the annual implicit costs for the firm described above?

Suppose a firm has an annual budget of $200,000 in wages and salaries,$75,000 in materials,$30,000 in new equipment,$20,000 in rented property,and $35,000 in interest costs on capital.The owner/manager does not choose to pay himself,but he could receive income of $90,000 by working elsewhere.The firm earns revenues of $360,000 per year. What are the annual economic costs for the firm described above?

A catfish farmer will shut down production when

Most of the 20 million businesses in the United States are perfectly competitive firms.

Profit

In making a production decision,an entrepreneur

Lashondra is the owner/operator of an interior design firm.Last year she earned $400,000 in total revenue.Her explicit costs were $200,000 (assume that this amount represents the total opportunity cost of these resources) .During the year she received offers to work for other design firms.One offer would have paid her $120,000 per year and the other would have paid her $130,000 per year.Lashondra's economic profit is equal to

A perfectly competitive firm will maximize profits by choosing an output level where

A firm experiencing economic losses will still continue to produce output in the short run as long as

In defining economic costs,economists emphasize

What serves as the supply curve for a perfectly competitive firm? Why is this supply curve upward-sloping,or why does it take a higher price to get a firm to produce and sell more output?