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Exam 12: Perfect Competition and the Supply Curve

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Question 71

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For a perfectly competitive firm, the short-run supply curve is the:

A) entire MC curve.
B) rising part of the MC curve beginning at the shut-down point.
C) rising part of the MC curve beginning where the firm starts earning economic profit.
D) MC curve below the shut-down point.

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Question 72

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Which of the following is TRUE?

A) If the price falls below the average total cost, the firm will earn economic profits.
B) Price and marginal revenue are the same in perfect competition.
C) Economic profit per unit is found by subtracting AVC from the price.
D) Economic profit is always positive in the short run.

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Question 73

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Use the following to answer questions: -(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $67.50, how much is Sergei's total cost at the profit-maximizing output?

Firms will make a profit in the long run or short run if the price is:

A perfectly competitive industry is in long-run equilibrium. Now suppose that the fixed costs of firms in the industry decrease. Describe how this change will affect short-run economic profits. How will this industry adjust in the long run?

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $4 per pound:

The short-run supply curve for a perfectly competitive firm is the ____ cost curve above the _____ price.

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. If the market price is G, the firm's total economic profit at its most profitable level of output is:

In the short run, a perfectly competitive firm produces output and earns ZERO economic profit if:

Use the following to answer questions: Figure: The Perfectly Competitive Firm -(Figure: The Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm. The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit. The firm's economic profit in the long run will be:

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm will shut down in the short run if the price falls below:

In perfect competition, a change in fixed cost will:

The horizontal sum of individual firms' MC curves is the:

If a perfectly competitive firm is producing a quantity where MC > MR, then profit:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:

Use the following to answer questions: -(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. Where does Sergei's short-run supply curve begin?

Use the following to answer questions: -(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $50, what quantity will Sergei produce to maximize profit?

Suppose Sarah's pottery studio is charging the market price, which is just higher than her minimum average total cost. This means that Sarah:

Use the following to answer questions: -(Table: Total Cost for a Perfectly Competitive Firm) Look at the 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 perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases, in the long run and the short run: