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Market demand is given as QD = 75 - 2P.Market supply is given as QS = 2P + 15.Each identical firm has MC = 3Q and ATC = 2Q.What is a firm's profit


A) $0.00
B) $18.75
C) $25.00
D) $50.00

E) C) and D)
F) A) and C)

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A firm is selling its product in a perfectly competitive market,and the price for its product is $10.Fill in the following table for the columns of price,total revenue,profit,marginal revenue,and marginal cost.If this firm is maximizing profit,how many units of output should it produce A firm is selling its product in a perfectly competitive market,and the price for its product is $10.Fill in the following table for the columns of price,total revenue,profit,marginal revenue,and marginal cost.If this firm is maximizing profit,how many units of output should it produce

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blured image Since at the profit-maximizin...

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In a market that allows free entry and exit,when does the process of entry and exit end for the typical firm in the market


A) when economic profit is zero
B) when total revenue is equal to average total cost
C) when average revenue exceeds marginal cost
D) when accounting profit is zero

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

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In the long run,a competitive market with 1000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

A) True
B) False

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A competitive market has a horizontal long-run supply curve and is in long-run equilibrium.If demand decreases,what can we be certain will happen in the short run


A) At least some firms will shut down.
B) Price will fall below marginal cost.
C) Price will fall below average total cost.
D) At least some firms will exit the industry.

E) A) and B)
F) B) and C)

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Market demand is given as QD = 140 - 4P.Market supply is given as QS = 3P.Each identical firm has MC = 5Q and ATC = 2Q.What is a firm's profit


A) $4
B) $32
C) $48
D) $80

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

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Which statement does NOT reflect a price-taking firm


A) If the firm were to charge more than the going price, it would sell none of its goods.
B) The firm has no incentive to charge less than the going price.
C) The firm can sell as much as it wants to sell at the going price.
D) Consumers have a major impact on price, not firms.

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

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When will a profit-maximizing firm shut down in the short run


A) when price is less than average variable cost
B) when price is less than average total cost
C) when average revenue is greater than marginal cost
D) when average revenue is greater than average fixed cost

E) A) and B)
F) A) and C)

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Whenever a perfectly competitive firm chooses to change its level of output,holding the price of the product constant,what happens to its marginal revenue


A) It increases if MR < ATC and decreases if MR > ATC.
B) It does not change.
C) It increases.
D) It decreases.

E) C) and D)
F) None of the above

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A firm in a competitive market will maximize profit when the level of production is such that marginal cost equals price.

A) True
B) False

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A firm's marginal cost has a minimum value of $2; its average variable cost has a minimum value of $5; and its average total cost has a minimum value of $7.At what product price will the firm shut down


A) below $5
B) above $10
C) above $11
D) above $12

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

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When firms have an incentive to exit a competitive market,which effect will their exit have


A) It will lower market price.
B) It will necessarily raise the costs of firms that remain in the market.
C) It will raise profits for firms that remain in the market.
D) It will shift the market supply curve to the right.

E) None of the above
F) A) and D)

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Figure 14-6 Figure 14-6 -Refer to Figure 14-6.When market price is P₁,which area represents a profit-maximizing firm's total revenue A) P₁ × Q₂ B) P₁ × Q₃ C) P₂ × Q₂ D) P₂ × Q₃ -Refer to Figure 14-6.When market price is P₁,which area represents a profit-maximizing firm's total revenue


A) P₁ × Q₂
B) P₁ × Q₃
C) P₂ × Q₂
D) P₂ × Q₃

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

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List and describe the characteristics of a perfectly competitive market.

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There are many buyers and sell...

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Managers of a firm think at the margin and make incremental adjustments to the level of production.For the managers to be satisfied with the correct level of production,what must result


A) average variable cost exceeds marginal cost
B) total cost is less than average revenue
C) costs are minimized
D) profit is maximized

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

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When new firms have an incentive to enter a competitive market,which effect will their entry have


A) It will increase the price of the product.
B) It will drive down profits of existing firms in the market.
C) It will shift the market supply curve to the left.
D) It will increase existing firms' average costs.

E) A) and C)
F) A) and B)

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What will change for a perfectly competitive firm if there are changes in its output without any change in the price of the product


A) total revenue
B) marginal revenue
C) average revenue
D) marginal cost

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

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News reports from Western Canada occasionally report incidents of cattle ranchers slaughtering a large number of newborn calves and burying them in mass graves rather than transporting them to markets.Assuming that this is rational behaviour by profit-maximizing "firms," explain what economic factors may influence such behaviour.

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If the selling price is not su...

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When existing firms in a competitive market are profitable,which of the following has an incentive


A) new firms to seek government subsidies that would allow them to enter the market
B) new firms to enter the market, even without government subsidies
C) existing firms to raise prices
D) existing firms to increase production

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

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Describe the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit-maximizing firm?

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Average revenue is total revenue divided...

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