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Exam 14: Firms in Competitive Markets

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Question 121

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A competitive firm sells 500 units of output and its marginal revenue at 500 units of output is $35. The firm's total revenue amounts to __________.

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Question 122

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If there is an increase in market demand in a perfectly competitive market, then in the short run

A) there will be no change in the demand curves faced by individual firms in the market.
B) the demand curves facing firms will shift downward.
C) the demand curves facing firms will become more elastic.
D) profits will rise.

E) C) and D)
F) B) and C)

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Question 123

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Scenario 14-2 The information below applies to a competitive firm that sells its output for $45 per unit. • When the firm produces and sells 120 units of output, its average total cost is $23.5. • When the firm produces and sells 121 units of output, its average total cost is $23.65. -Refer to Scenario 14-2. When the firm produces 120 units of output, its total cost is

​In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

A competitive firm sells its output for $10 per unit. Is the firm's average revenue less than, equal to, or greater than $10?

Explain the difference between the short run and the long run in terms of the number of firms in a competitive market.

For a firm operating in a competitive market, both marginal revenue and average revenue exceed the market price.

​Firms operating in a perfectly competitive market have an incentive to advertise their products since this will increase the demand for their products.

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

Does a competitive firm have the ability to influence the quantity of output it supplies? Does it have the ability to influence its average revenue?

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

A competitive firm is producing 500 units of output and its efficient scale is 400 units of output. Can the market in which this firm operates be in a long-run equilibrium? Briefly explain.

A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: ​ -Refer to Figure 14-1. The firm should shut down if the market price is

Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends that Ms. Joplin increase her production. The consultant must have concluded that, at her current level of production, Ms. Joplin's

Firms operating in perfectly competitive markets try to maximize profits.

Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Identify costs, revenue, and the economic losses on your graph. Using your graph, determine whether an individual firm will shut down in the short run, or choose to remain in the market. Explain your answer.

Figure 14-7 ​ -Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D₀ to D₁. Which of the following statements is not correct?