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Exam 14: Firms in Competitive Markets

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Question 221

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Figure 14-11 -Refer to Figure 14-11. The figure above is for a firm operating in a competitive industry. If there were four identical firms in the industry, which of the following price-quantity combinations would be on the market supply curve?

A) A only
B) A and C only
C) B only
D) B and D only

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Question 222

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Firms operating in competitive markets produce output levels where marginal revenue equals

A) price.
B) average revenue.
C) total revenue divided by output.
D) All of the above are correct.

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Question 223

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Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will be encouraged to enter this market for all prices that exceed

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

Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.

Figure 14-14 -Refer to Figure 14-14. If the market starts in equilibrium at point Z in panel (b) , a decrease in demand will ultimately lead to

Which of the following is not a characteristic of a competitive market?

If a profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost, it should

In calculating accounting profit, accountants typically don't include

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 at a market price of $1.75, 52,500 units of output are supplied to this market, how many identical firms are participating in this market?

Total profit for a firm is calculated as

Table 14-5 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-5. For this firm, the average revenue when 14 units are produced and sold is

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

In the long run, a firm should exit the industry if its total costs exceed its total revenues.

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. In order to maximize profits, the firm should stop producing after it makes the

Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $200 per child. In order to maximize profits, Robin should

Scenario 14-2 Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. -Refer to Scenario 14-2. At Q = 999, the firm's profits equal

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. If the market price is $10, what is the firm's total cost?

If all existing firms and all potential firms have the same cost curves, there are no inputs in limited quantities, and the market is characterized by free entry and exit, then the long-run market supply curve

Table 14-1 -Refer to Table 14-1. Over what range of output is marginal revenue declining?