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Exam 14: Firms in Competitive Markets

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Question 221

Multiple Choice

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A seller in a competitive market can

A) sell all he wants at the going price, so he has little reason to charge less.
B) influence the market price by adjusting his output.
C) influence the profits earned by competing firms by adjusting his output.
D) All of the above are correct.

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Question 222

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Suppose that a competitive market is initially in equilibrium. Then demand increases. If entering firms face the same costs as existing firms and sufficient resources are available for entering firms,

A) the long-run market supply curve will be upward sloping.
B) the long-run market supply curve will be perfectly elastic.
C) in the long run firms will suffer economic losses, leading them to exit the industry.
D) the number of firms will decrease, and the market will become a monopoly.

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Question 223

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For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal.

Scenario 14-1 Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. -Refer to Scenario 14-1. At Q = 999, the firm's total costs equal

A competitive firm's profit will be increasing as long as marginal revenue is greater than marginal cost.

The stable, long-run equilibrium in a competitive market occurs when the market price equals the lowest point on a firm's average total cost curve.

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determine the profit-maximizing level of production.

​Perfectly competitive markets are characterized by

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price rises above $6.30, the firm will earn

Table 14-12 -Refer to Table 14-12. What is the marginal cost of the 8th unit?

​In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Free entry means that

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

A firm that shuts down temporarily has to pay

Which of the following firms is the closest to being a perfectly competitive firm?

​Table 14-16 The table represents the demand information for a firm in a competitive market. ​ -Refer to Table 14-16. For this firm, when output is equal to 12 units, average revenue is

Table 14-3 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-3. For this firm, the price is

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. When Bob produces and sells the profit-maximizing quantity, how much profit does he earn?

In a competitive market with free entry and exit, if all firms have the same cost structure, then