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The demand curve as perceived by a perfectly competitive firm is

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 11RQ: A single firm in a perfectly competitive market is relatively small compared to the rest of the...

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20-The demand curve as perceived by a perfectly competitive firm is _______________.

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A single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How small is small?
28.The following information is available for a company that operates in a perfectly competitive market. Current Output 5000 units Current Market Price $5 Total Cost $25,000 Marginal Cost $4 Total Variable Cost $20,000 What is the best action for this firm? A-Increase output in the short run and stay in the market the long run. B-Increase output in the short run and decrease output in the long run C-Shut down in the short run and exit in the long run D-Shut down in the short run and produce in the long run E-Reduce output in the short run and increase output in the long run 29.Which of the following statements is true of a perfectly competitive market in the long run? A-No firms can enter or exit. B-All firms earn normal profits, and there is both productive and allocative efficiency. C-Individual firms produce where average variable cost equals marginal cost and marginal revenue. D-It is allocatively efficient but may or may not be productively…
40) The long run equilibrium of a perfectly competitive firm occurs where a) price is higher than marginal revenue b) there are constant returns to scale c) firms make profits d) marginal cost is less than marginal revenue
11. Given perfect competition show on a diagram that profit maximisation implies marginal revenue equals marginal cost equals price. Briefly explain how and why this outcome differs from the equilibrium. Not sure if the attached diagram helps please explain how to solve this questionn
31) If marginal revenue is less than marginal cost for a perfectly competitive firm , it should a) decrease production b) increase production c) not change production d) increase the price of its product
15 Explain why perfect competition is not compatible with firms having increasing returns to scale production (IRS) technologies (Hint: draw the demand curve, declining AC and constant MC and analyze profit maximization of perfectly competitive firm)
30.What is true of a firm's production if it operates in a perfectly competitive market in long-run equilibrium? Marginal revenue = demand = marginal cost > average total cost Marginal revenue = marginal cost = average fixed cost Average total cost = price = average variable cost Marginal cost < Marginal revenue Price = marginal cost = average total cost
30) If an individual perfectly competitive firm charges a price above the industry equilibrium price, it willA) not sell any of what it produces.B) sell all that it can produce and gain more revenue than competitors.C) sell all that it can produce and gain equal revenue with competitors.D) sell part of what it can produce and gain less revenue than competitors will.
Discuss the long-term effects in a perfectly competitive market if an existing firm is making profits or losses. Use graphs to explain your explanations.
30. Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount. 31. If barriers to entry ________ or product differentiation ________, competition in a market will ________. increase; increases; increase increase; decreases; increase decrease; increases; increase decrease; decreases; increase decrease; decreases; decrease
26 - What is the maximum profit condition in a perfectly competitive market? a) TC<MR B) MC=MR C) P<AC D) AC=AR TO) TC=TR
M/c questions - Microeconomics 15) The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above which average cost? A. fixed cost B. variable cost C. total cost D. sunk cost 14) When a perfectly competitive firm makes a decision to shut down, which is most likely? A. price is below the minimum of average variable cost B. marginal cost is above average total cost C. marginal cost is above average variable cost D. fixed costs exceed variable costs