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Exam 12: Perfect Competition and the Supply Curve

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Question 131

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Which statement is NOT a characteristic of a perfectly competitive industry?

A) Firms seek to maximize profits.
B) Profits may be positive in the short run.
C) There are many firms.
D) Products are differentiated.

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Question 132

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Use the following to answer questions : Figure: The Perfectly Competitive Firm -In perfectly competitive long-run equilibrium:

A) all firms make positive economic profits.
B) all firms produce at the minimum point of their average total cost curves.
C) the industry supply curve must be upward sloping.
D) all firms face the same price,but the value of marginal cost will vary directly with firm size.

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Question 133

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In the short run,if P < AVC at the quantity where MR = MC and fixed cost is greater than zero,a perfectly competitive firm produces _____ and takes an economic _____.

Marginal revenue is a firm's:

In the long run,all of the firms in a perfectly competitive industry will:

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

Use the following to answer questions : $\begin{array}{l}\text { Table: Total Cost and Output }\\\begin{array} { l c } \hline \text { Output } & \text { Total Cost } \\\hline 0 & \$ 10 \\1 & 60 \\2 & 80 \\3 & 110 \\4 & 170 \\5 & 245 \\\hline\end{array}\end{array}$ -(Table: Total Cost and Output) Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.Which point falls on Sergei's short-run supply curve (assuming he can only produce whole quantities of output) ?

Use the following to answer questions : Figure: The Perfectly Competitive Firm -Suppose that some firms in a perfectly competitive industry are earning positive economic profits.In the long run,the:

A perfectly competitive industry has 10 firms,each with an MC curve that can be expressed as MC = 5q,where q is the level of output for each firm.Which equation would describe the industry supply curve,where Q is the market quantity and P is the market price?

A perfectly competitive firm is definitely earning an economic profit when:

A perfectly competitive firm will not produce any output in the short run and will shut down if the price is:

Use the following to answer questions : $\begin{array}{l}\text { Table: Cherry Farm }\\\begin{array} { c c } \hline \begin{array} { l } \text { Quantity of } \\\text { cherries } \\\text { (in pounds) }\end{array} & \text { Total Cost } \\\hline 0 & \$ 2 \\1 & 7 \\2 & 11 \\3 & 13 \\4 & 16 \\5 & 21 \\6 & 28 \\7 & 38 \\\hline\end{array}\end{array}$ -(Table: Cherry Farm) Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

Use the following to answer questions : $\begin{array}{l}\text { Table: Variable Costs for Lawns }\\\begin{array} { c c } \hline \begin{array} { c } \text { Quantity } \\\text { of Lawns }\end{array} & \text { Variable Costs } \\\hline 0 & \$ 0 \\10 & 100 \\20 & 300 \\30 & 500 \\40 & 1,100 \\50 & 1,800 \\60 & 2,900 \\\hline\end{array}\end{array}$ -(Table: Variable Costs for Lawns) Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between) .His only fixed cost is $1 000 for the mower.His variable costs include fuel,his time,and mower parts.Which point falls on Alex's short-run supply curve?

Suppose that some firms in a perfectly competitive industry earn negative economic profits in the short run.In the long run,the:

If a firm in perfect competition sells 10 units of output at $5 per unit,its marginal revenue is:

The short-run supply curve for a perfectly competitive firm is its:

Use the following to answer questions : Figure: The Profit Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Use Figure: The Profit-Maximizing Firm in the Short Run.At q₂,ATC is the vertical distance between q₂ on the horizontal axis and:

In the short run,a firm will produce as long as the price is GREATER than its:

In the short run,a perfectly competitive firm produces output and breaks even if the firm produces the quantity at which:

Many furniture stores run "going-out-of-business" sales but never actually go out of business.Assume that furniture is sold in a perfectly competitive market.For a furniture firm to actually shut down in the short run,the price of furniture must be _____ than the _____ average variable cost.