| Mohammad | Britney | Chad | Blama |
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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?
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What is a Perfect Competition.
A market structure in which buyers and sellers are price takers.
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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. If firms in a competitive market are not identical, then the long – run market supply curve will be
A) True B) False |
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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.
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What are firms producing identical products, transaction costs are negligible and firms can freely exit the market in the long run.
Characteristics of a Perfectly Competitive Market include consisting of small buyers and sellers, all market participants have full information about price and product characteristics and these three things.
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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. |
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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. |
The cost of shutting down is higher is higher than the cost of operating (FC is high).
Why do some firms operate at a loss in the short-run?
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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. |
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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. |
B)There is free entry and exit.
If the firm rises the price other firms will find an opportunity to enter the market and that will lower the price.
If a firm happened to be the only seller of a particular product , it might behave as a price taker as long as?
A) There are many buyers B) There is free entry and exit |
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:
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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. |
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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?
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B)Dependent on the characteristics of the industry.
Every industry has its own characteristics therefor a period that is considered a short run for one industry is not the same in other industries.
The short run is ?
A) Usually 3-6 months B) Dependent on the characteristics of the industry C) Identical to the long run for most firms. |
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?
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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
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