| Category #1 | Category #2 | Category #3 | Category #4 |
|---|---|---|---|
|
FALSE:in the long run firms should shut down when there revenue is less than the avoidable cost.
(true/false) In the long run a firm shuts down if the revenue is more than the avoidable cost?
|
What is a Perfect Competition.
A market structure in which buyers and sellers are price takers.
|
C) Firms may choose to operate at a loss.
In the short run:
A) Profit maximizing firms have identical short run supply curves. B) Firms will shut down if operating at a loss. C) Firms may choose to operate at a loss. D) Most firms have short run supply curves that are the same as long run. |
True
Any firm that does not maximize profit loses money. So, to survive in a competitive market in the long run, a firm must maximize its profit
A) True B) False |
|
TRUE: In the long run a firm can shutdown and not be responsible for any costs.
(true/false) In the long run all costs are avoidable.
|
No single firm can raise or lower the market price.
A large number of buyers and sellers cause this to prices in the market.
|
C) Average variable cost.
In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and
A) Total fixed cost. B) The number of buyers C) Average variable cost. D) Total cost. |
C) The long run supply curve is the sum of the individual firms supply curves.
Like the short run
A) Firms operate only if they make a positive profit. B) The maximum number of firms in the market is fixed. C) The long run supply curve is the sum of the individual firms supply curves. D) All of the above. |
|
A) How much to produce and whether to produce at all.
Explanation: With more competition out there the less of the market share a firm has and therefore firms have to determine how much they should produce or whether they should produce at all.
in a competitive market a firms two profit maximization decisions in long-run are?
A) How much to produce and whether to produce at all. B) How much to charge and how much to produce. |
TRUE: Because they are selling identical/homogenous products, buyers can go to other firms if one raises it, and if they lower their price, everything will be purchased and they will go out of business. Therefore, their curve has to stay horizontal.
(true/false) A perfectly competitive firm's demand curve is horizontal.
|
B) Revenue covers variable costs and some of the fixed costs, although profit is negative.
If market price is greater than the minimum of AVC but below the minimum of AC, then
A) The firm will shut down. B) Revenue covers variable costs and some of the fixed costs, although profit is negative. |
B) Horizontal
If firms in a competitive market are not identical, then the long – run market supply curve will be
A) Undetermined B) Horizontal C) Upward sloping D) Downward sloping. |
|
B) Free entry and exist.
Explanation: If profits are positive, new firms will enter the industry, piling in until they compete away all these profits. If long-term profits are negative, firms will exit until the price rises enough that firms break-even
In the long run Profits will equal to zero in a competitive market because of?
A) Identical products being produced by all firms. B) Free entry and exist. C) Constant return to scale. |
What are Granny Smith apples.
The book uses this example to explain about identical products in a perfectly competitive market.
|
Shut down because average variable cost is greater than the market price.
Initially, the market price is p = 19, and the competitive firm’s average variable cost is 20, while its average cost is 23. Should it shut down? The Firm should:
|
B) It can earn a positive long – run profit.
A firm will enter a competitive market when
A) It can gather market share at the expense of incumbent firms. B) It can earn a positive long – run profit. C) The long – run supply curve is upward sloping. D) It would not be the last firm entering. |
|
government regulations.
Explanation: Government sometimes restrict the number of firms operating in a cretin market. an example would be the number of Taxi drivers. OR High setup costs.
In some markets firms find significant costs to enter. Name one?
|
FALSE: 5 1) The market consists of many small buyers and sellers. 2) All firms make produce identical products. 3) All market participants have full information about price and product characteristics. 4) Transaction costs are negligible 5) Firms can free
(true/false) 3 characteristics that force firms to be price takers are: 1) The market consists of few buyers and sellers. 2) All firms make produce various products. 3) All market participants are not given information about price and product character
|
Not shut down because variable cost is less than revenue.
In the short-run, should a firm shut down if its revenue is R = $800 per week, its variable cost is VC = $700, and its sunk fixed cost is F = $2,400?
|
50,000 (Q= 10,000/0.20= 50,000)
Suppose that for each firm is competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q =10,000/p. if the long – run supply curve is horizontal, then how many pounds of p
|
Support Us on Ko-fi