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Chapter 6. Perfectly Competitive Supply
Chapter 6. Perfectly Competitive Supply
Terms in this set (64)
If the marginal cost of producing an additional unit of a good is less than price of that good, then the firm should
The picture on the right shows the cost curves for the West End Bakery. In this picture the bakere's profits equal _____________ dollars per day (enter a number only)
For a firm that produces bread, which of the following is likely to be a factor of production
Ovens, bakers, and flour
If a firm in a perfectly competitive market chooses the level of output such that price equals marginal cost, then the firm is
maximizing its profits
A firm's__ cost is the sum of all payments the firm makes to inputs who's quantities can be altered in the short run
Fixed cost + variable cost =
The period of time sufficiently short that at least some of the firm's factors of production are fixed is known as the
total revenue minus total cost
a ____________________ of production is an input used in the production of a good or service
Which of the following are characteristics of perfectly competative markets?
Buyers are well informed....The market has many sellers...
An input whose quantity cannot be altered in the short run is a ________________factor of production.
As the number of suppliers in the market increases, the market supply curve will shift to the
A variable factor of production is
an input whose quantity can be changed in the short run
Which of the following capture the conditions under which firms will shut down?
If the firm's revenue is less than the firm's variable cost...if price is less than average...
A firm is profitable if its total revenue exceeds its
If Mitch's Surf Shop has $30,000 in revenue each month and if the total cost of operating the shop is $26,000 each month, then the monthly profit for his shop is what?
Supply curves are upward sloping in part because as price rise
Firms with a higher opportunity cost.....Individual suppliers....
A firm's fixed cost is the sum of all payments made
to the firm's fixed factors of production
Suppose that when the price of tomatoes is $2 per pound, there are 5 farmers each willing to supply 10 pounds per day, and 3 farmers ech willing to supply 20 pounds per day. Thus, when the price of tomatoes is $2 per pound, the market supply of tomatoes is ____________110 pounds per day
a firm's profit-maximizing level of output will not change when the firm's.... cost changes.
average total cost curve
averafe variable cost curve
Given the figure on the right, if strawberries sell for $3 per pound, producer surplus is ____________ dollars per day
a price taker is
a firm that has no influence over the price at which it sells its product
Suppose the owners of a local brewery carry property insurance that is paid for on an annual basis. In deciding how much beer to produce on any given day, the annual cost of the property insurance is considered a
Producer surplus is the amount by which
price exceeds the seller's reservation price
a firm cannot be profitable unless
price is greater than average total cost for some level of output
The figure to the right shows the supply curve for the apply of my pie baking company. if there are 100 pie baking companies in the market, each with a supply curve like that of the apply of my pie baking company, then the price of a pie is $10, what's the total market supply of pies each day?
Consider the table on the right, which shows the toatl cost of producing wedding cakes at Crumby Bakery. If the market price for a wedding cake is $350, and Crumby Bakery is a price-taker, how many weeding cakes should the bakery make each day
an imperfectly competitive firm has
at least some control over price
At each point along a market supply curve, ____________ measures each seller's marginal cost of production.
If a firm's total revenue is greater than its total cost, then the firm
the picture on the right shows the cost curves for the west end bakery. If the West end bakery produces 30 loaves of bread per day, then the cost of producing the last of bread was
less than the revenue the firm gained from selling it.
The period of time of sufficient length that all firm's factors of production are variable is known as the
Suppose that when the price of apples is 25 cents each, there are 10 farmers who each supply 600 apples per day, and 2 farmers who each supply 1000 apples per day. Thus, when the price of apples is 25 cents, the market supply of apples is ___________ per day
the demand curve facing a firm in perfectly competitive market is
a horizontal line at the equilibrium price
as an input prices increase, the cost of producing each additional unit of output increases, leading to
a decrease in supply
an input quantity cannot altered in the short run __________ facor of production
as output changes from one level to another, the change in total cost divided by corresponding change in output is the firm's
The property that when some factors of production are fixed, increased production of a good eventually requires ever-larger increases in the variable factor known as
law of diminishing returns
If marjory goes from painting 6 to 8 paintings each month, her total costs increase from $620 to $720 per motnh. This implies that the marginal cost of one additional painting is
$50(720-620)/(8-6) = 50
If there are 100 pie baking companies in the market, each with a supply curve like that fo the apply of my pie baking company, then when the price of a pie is $17, whats the total market supply of pues each day
Suppose a recent announcement by the US department of agriculture leads Mr. Xuckerman, who grows sugar cane, to beleive that the price of sufar cane will increase sharply next year. this should lead mr. zuckerman's current supply of sugar cane to
Technological innovations in the production process tend to increase supply because they
decrease marginal cost
If output can be varied continuously, then firms in a perfectly competitive market maximize their profits by choosing the level of output such that
When Cathy goes from hiring 10 to 11 workers in her bakery, her total output increases from 100 to 120 loaves of bread/day. If Cathy's production process exhibits diminishing marginal returns, then when she hires 12 workers, we know her total output will be less than ____ loaves of bread/day
The marginal cost curve passes through the minimum of the
average total cost curveaverage variable cost curve
average total cost curve is
total cost divided by total output
Consider the table on the right, which shows the toatl cost of producing wedding cakes at Crumby Bakery. If the market price for a wedding cake is $250, and Crumby Bakery is a price-taker, how many weeding cakes should the bakery make each day
The law of diminishing returns explains why marginal costs eventually _________.
suppose the owners of a local brewery decide to produce one additional keg of beer, the resulting increase in their total cost is the ___________ of producing an additional keg.
Suppose the automobile manufacturing companies in an economy use a similar set of inputs to produce cars and SUVs. If the market price of SUVs increases, which of the following is likely to happen to the supply of cars?
it will decrease
Average variable cost is:
a firm's variable cost divided by total output
suppose the owners of a local brewery can easily change the number of workers they hire each day to help brew beer. In deciding how much beer to produce each day, the daily cost of hiring their workers is a
a perfectly competitive market is a maket in which
no individual seller has a significant influence over the market price of a product
in perfectly competitive markets, firms choose
how much to produce but not the price of their output
The picture on the right shows the cost curves for the WEB. If the price of bread is $3 per loaf, then the profit maximizing level of output for the WEB is
if a perfectly competitive market, the portion of the marginal cost curve that lies above the average variable cost curve is the firm's
If a firm is profitable, then at its profit maximizing level of output, its total revenue:
is greater than its total cost
The demand curve facing a firm in a perfectly competitive market is
a horizontal line at the equilibrium price
Suppose Elsa owns an ice cream shop. If she expects the price of ice cream to fall next month, then this should ________.
lend her current supply of ice cream to increase
the picture on the right shows the cost curves for the west end bakery. If the West end bakery produces 30 loaves of bread per day, then the firm
should produce more because price is greater than marginal cost
a market in which no individual supplier has significant influence on the market price of the product
perfectly competitive market
firms in perfectly competitive markets
have no control over price, and instead choose the level of output to maximize profit
in a perfectly competitive market, the supply curve for a firm
is the portion of the marginal cost curve that lies above the average variable cost curve
Firms in perfectly competitive markets face demand curves that ar
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