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50 terms

econ test 2 ch. 7 pt. 1

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Which of the following is false of perfectly competitive firms?
Because perfectly competitive firms are price takers, each firm's demand curve remains unchanged even when the market price changes.
Perfect competition is the term used to describe:
an industry in which numerous price-taking firms produce identical products.
Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price?
Numerous competitors produce the same product and charge the market price.
In the short run, a perfectly competitive firm will maximize profit by producing where:
MC = MR.
If the market price was $9.50, how many units should the perfectly competitive firm depicted below produce in order to maximize profits?
12
A profit-maximizing firm in a perfectly competitive market will always produce a quantity of output that:
maximizes the amount by which total revenue exceeds total cost.
A perfectly competitive firm has no influence over price because:
its output is insignificant relative to the market as a whole.
Which one of the following is not a characteristic of a perfectly competitive market?
Firms advertise in order to distinguish their products and increase market share.
Which of the following is a characteristic of perfect competition?
none of the above
A firm sells grapefruit in a perfectly competitive market at a price of $1.50 per pound. The firm's mar-ginal revenue:
equals $1.50.
Assume you know the following short run information for a perfectly competitive firm: Based on the information above, which of the following is true?
The profit from producing 12 units of output will be the same as for producing 6 units of output.
If a perfectly competitive firm's marginal revenue was less than its marginal cost,
it would contract its output but not raise its price in order to increase its profits.
Marginal revenue for a perfectly competitive firm equals:
average revenue at all levels of output.
Which of the following is true about perfect competition?
All of the above are true about perfect competition.
Perfectly competitive markets are characterized by:
none of the above.
Which of the following is most likely to be a price taker?
a Kansas wheat farmer
A profit-maximizing firm in a perfectly competitive market will always produce a quantity of output that:
maximizes the amount by which total revenue exceeds total cost.
The demand curve facing a perfectly competitive firm is:
perfectly elastic.
A perfectly competitive firm faces a demand curve that is:
horizontal and perfectly elastic
In a perfectly competitive industry, influence over price is exerted by:
the forces of supply and demand.
Which of the following is characteristic of a perfectly competitive market?
There is free entry into and exit from the market.
Which of the following is false of perfectly competitive firms?
Because perfectly competitive firms are price takers, each firm's demand curve remains unchanged even when the market price changes.
A perfectly competitive firm is a:
price taker
Which of the following is a characteristic of perfect competition?
none of the above
Perfectly competitive markets are characterized by
none of the above.
In the perfectly competitive model, all firms are assumed to be producing
identical products.
The perfectly competitive model assumes that:
firms can enter and exit the industry with relative ease.
Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price?
Numerous competitors produce the same product and charge the market price.
A firm that is a price taker:
will lose all sales if it prices its product in excess of the market equilibrium price.
A competitive firm facing a perfectly elastic demand curve can:
sell all of its output at the market price.
Marginal revenue is:
the addition to total revenue from selling one more unit of output.
Marginal revenue for a perfectly competitive firm equals:
average revenue at all levels of output.
Which one of the following is not a characteristic of a perfectly competitive market?
Firms advertise in order to distinguish their products and increase market share.
If the market price was $9.50, how many units should the perfectly competitive firm depicted below produce in order to maximize profits?
12
Which market structure is characterized by many sellers, easy entry, and homogeneous products?
perfect competition
In a perfectly competitive industry, influence over price is exerted by:
the forces of supply and demand.
Which of the following is a characteristic of a perfectly competitive market?
Homogeneous products.
Assuming a price was $2.00, how many units should this perfectly competitive firm produce and sell in order to maximize profits?
26
Which of the following is true?
The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its total revenues and total cost.
Which of the following is most likely to be a price taker?
a Kansas wheat farmer
Which one of the following is not a characteristic of a perfectly competitive market?
Firms advertise in order to distinguish their products and increase market share
Perfect competition is the term used to describe:
an industry in which numerous price-taking firms produce identical products
In the short run, a perfectly competitive firm will maximize profit by producing where:
MC = MR.
Which of the following most closely resembles a perfectly competitive market?
the wheat market
If a price-taking firm selling in a competitive market raises the price of its product above the market-clearing price, it will:
not be able to sell any output.
A perfectly competitive firm faces a demand curve that is:
horizontal and perfectly elastic.
The horizontal demand curve facing an individual firm in a perfectly competitive market:
is a reflection of the firm's small size relative to the total market.
Which of the following is true of perfectly competitive firms?
For a perfectly competitive firm, as long as the price derived from expanded output exceeds the margin-al cost of that output, the expansion of output creates additional economic profits.
A competitive firm facing a perfectly elastic demand curve can:
sell all of its output at the market price.
Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price?
Numerous competitors produce the same product and charge the market price.