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Exam 14: Firms in Competitive Markets

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Question 151

Multiple Choice

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In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run?

A) $0 per unit
B) $1 per unit
C) $2 per unit
D) $3 per unit

E) All of the above
F) None of the above

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Question 152

Multiple Choice

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In the short run, a market consists of 100 identical firms. The market price is $8, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

A) 200 units
B) 300 units
C) 400 units
D) 500 units

E) All of the above
F) A) and B)

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Question 153

Multiple Choice

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The competitive firm's short-run supply curve is that portion of the

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P7, a profit-maximizing firm's short-run profits can be represented by the area

Figure 14-11 -Refer to Figure 14-11. The figure above is for a firm operating in a competitive industry. If there were eight identical firms in the industry, which of the following price-quantity combinations would be on the market supply curve? Point Price Quantity A $4 4 B $4 32 C $6 6 D $8 64

When it produces and sells 80 units of output, a competitive firm's average total cost is $25 and its profit is $480. What is the firm's total revenue if it sells 85 units of output?

​All firms operating in a perfectly competitive market produce unique goods.

Mrs. Smith is operating a firm in a competitive market. The market price is $6.50. At her profit-maximizing level of output, her average total cost of production is $7.00, and her average variable cost of production is $6.00. Which of the following statements about Mrs. Smith's firm is correct?

In calculating accounting profit, accountants typically don't include

​A restaurant, which operates in a perfectly competitive market, is evaluating whether it should serve breakfast on a daily basis. It would choose to do this when its revenues cover its variable costs.

The assumption of a fixed number of firms is appropriate for analysis of

A firm's incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin.

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

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm should not produce an output level beyond

Because there are many sellers in a competitive market, individual firms are unable to maximize profits.

A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price falls to $18, and the firm makes whatever adjustments are necessary to maximize its profit at the now-lower price. Once the firm has adjusted, its

The two characteristics of a competitive market are 1) many buyers and sellers in the market and 2) the goods offered by the various sellers are highly differentiated.

Which of the following statements best expresses a firm's profit-maximizing decision rule?

In a long-run equilibrium, the marginal firm has

If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then