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Exam 14: Firms in Competitive Markets

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Question 201

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If a firm in a competitive market doubles its number of units sold, total revenue for the firm will

A) more than double.
B) double.
C) increase but by less than double.
D) may increase or decrease depending on the price elasticity of demand.

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Question 202

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Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. -Refer to Figure 14-9. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?

A) 300
B) 6,000
C) 30,000
D) 60,000

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Question 203

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Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal revenue is equal to

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.

Table 14-13 Diana's Dress Emporium -Refer to Table 14-13. What is Diana's economic profit at the profit maximizing point?

For a firm operating in a competitive industry, which of the following statements is not correct?

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10. The marginal cost of producing the 4th unit is

A seller in a competitive market

When a competitive firm doubles the quantity of output it sells, its

If a firm operating in a competitive industry shuts down in the short run, it can avoid paying

When an individual firm in a competitive market decreases its production, it is likely that the market price will rise.

Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price.

When price exceeds average variable cost in the short run, a competitive firm's marginal cost curve is regarded as its supply curve because

The short-run supply curve for a firm in a perfectly competitive market is

Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur? (i) New firms will enter the market. (ii) In the short run, price will rise; in the long run, price will rise further. (iii) In the long run, all firms will be producing at their efficient scale.

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

The exit of existing firms from a competitive market will

Which of the following represents the firm's long-run condition for exiting a market?

Suppose a firm is considering producing zero units of output. We call this shutting down in the short run and exiting an industry in the long run.