When market price is at P4 a profit maximizing firm will produce what level of output?

A market is competitive if each buyer is small compared to market and each seller is:

Small compared to the market

When a firm has little ability to influence market prices it is said to be in:

In a competitive market, the actions of any single buyer or seller will have a:

Negligible impact on the market price

For a firm in a perfectly competitive market, the price of the good is:

Always equal to marginal revenue (and average revenue)

If a firm in a perfectly competitive market triples the number of units of output sold, then total revenue will:

Firms have difficulty entering the market, this is:

NOT a characteristic of a perfectly competitive market

When buyers in a competitive market take the selling prices as given, they are said to be:

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

For a competitive firm, Profit=

Average revenue, marginal revenue, and the price of the good are all equal to one another.

At a production level of 4 units which of the following is true?

Total revenue is greater than variable cost

At which quantity of output is marginal revenue equal to marginal cost?

If this firm chooses to maximize profit it will choose a level of output where marginal cost is equal to

The maximum profit available to this firm is

If marginal cost exceeds marginal revenue, the firm

May still be earning a profit.

When marginal revenue equals marginal cost, the firm

May be minimizing its losses, rather than maximizing its profit.

When price is equal to P3, the profit-maximizing firm will produce what level of output?

When market price is at P4, a profit maximizing firm will produce:

When market price is at P2, a firm producing output level Q1 would experience

Losses because P2 < ATC at output level Q1

The additional revenue a firm in a competitive market receives if it increases its production by one unit equals it

all of the above (marginal revenue, average revenue, price per unit of output)

The short-run supply curve for a firm in a perfectly competitive market is

Its marginal cost curve (above average variable cost).

When a perfectly competitive firm makes a decision to shut down, it is most likely that:

Price is below the minimum of average variable cost.

Firms that shut down in the short run still have to pay their

When total revenue is less than variable costs, a firm in a competitive market will

Which line segment best reflects the short-run supply curve for this firm

If the firm is in a short-run position where P<AVC, it is most likely to be on what segment of its supply curve?

None of the above (BC,CD,DE)

Which line segment best reflects the long-run supply curve for this firm?

This firm will exit the market for any price on the line segment

In the long run all of a firm’s costs are variable. In this case the exit criterion for a profit-maximizing firm is

price < average total cost.

Profit-maximizing firms enter a competitive market when, for existing firms in that market,

price exceeds average total cost.

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

a one-unit increase in output will increase the firm’s profit

Which of the following statements is correct regarding a firm’s decision making?

The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision

The complete description of a competitive firm’s supply curve is as follows: The competitive firm’s short-run supply curve is that portion of the

Marginal cost curve that lies above average variable cost

A firm will exit a maret if, for all positive levels of output,

All of the above are correct

A) its total revenue is less than its total cost

B) its profit is negative

C) the price of its product is less than its average total cost

when new firms have incentive to enter a competitive market, their entry will

drive down profits of existing firms in the market

In a perfectly competitive market, the process of entry and exit will end when, for firms in the market,

Economic profits are zero

If the figure in panel (a) reflects the long-run equilibrium of a profit-maximizing firm in a competitive market, the figure in panel (b) is most likely to reflect long-run market

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

The entry of new firms into a competitive market will:

Increase market supply and decrease market prices.

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is

A long-run supply curve that is flatter than a short-run supply curve results from which of the following?

firms can enter and exit a market more easily in the long run than in the short run

A market might have an upward-sloping long-run supply curve if

firms have different cost

The assumption of a fixed number of firms is appropriate for analysis of

the short run, but not the long run.

In competitive markets, firms that raise their prices are typically rewarded with larger profits.

When individual firms in competitive markets increase their production, it is likely that the market price will fall

In a competitive market, firms are unable to differentiate their product from that of other producers.

Firms in competitive markets are said to be price takers

For a firm in a competitive market, marginal revenue is always equal to average revenue

A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost.

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

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determine the profit-maximizing level of production.

A firm’s incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin.

When a profit-maximizing firm in a competitive market experiences rising prices, it will respond with an increase in production

A firm will shut down in the short run if revenue is not sufficient to cover its variable costs of production

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production

The supply curve of a firm in a competitive market is the average variable cost curve, above the minimum of marginal cost

In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market.

The long-run equilibrium in a competitive market characterized by firms with identical costs is generally characterized by firms operating at efficient scale.

A competitive market will typically experience entry and exit until all accounting profits are zero

In the long run, a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm’s average total cost.

At the end of the process of entry and exit, it is possible that some firms in a competitive market are making a positive economic profit.

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

When a firm experiences zero-profit equilibrium, the firm’s revenue must be sufficient to cover all opportunity costs

The marginal firm in a competitive market will earn zero economic profits in the long run

A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run.

A monopoly's marginal cost will

be less than the price per unit of its product.

A monopoly has the ability to:

set  the price of its product at whatever level it desires

Examples of barriers to entry include:

i) Key resource is owned by single firm
ii)cost of production
iii) govement has given the existing monopoly right
---all of the above!

To define a monopoly, we cite the following characteristics:

i) the firm is the sole seller of its product

ii) the firm's product does not have close substitutes

a natural monopoly occurs when..

there are economies of scale over the relevant range of output.

The De beers diamond company advertises to promote the sale of all diamonds, not just its own.  This isi evidence that they:

Have a monopoly position to some degree

The amount of power that a monopoly has is a function of whether there:

There are close substitutes for its product

Declining average total cost with increased production is one of the defining characteristic of a:

When a monopoly charges a higher price,

Fewer of its goods are sold

Average revenue for a monopoly is the:

For a monopoly, marginal revenue is _________ than the price they charge for their good.

Like monopolies, competitive firms choose to produce a quanity in which marginal revenue

During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing:

the quantity at which MR equals MC.

What level of output does the profit

How much will the firm produce in order to Maximise profits at a price of 4 per unit?

How do you find profit

Is profit maximized when P MC?