Perfect competition is efficient because all the following conditions hold except ________. A. total product is maximized B. firms maximize profit and produce on their supply curves C. consumers get a real bargain and pay a price below the value of the good D. firms minimize their average total cost of producing the good

Average variable cost is at a minimum when ________.

A. marginal cost equals average variable cost

B. average total cost is at a minimum

C. marginal cost exceeds average fixed cost

D. average total cost exceeds average variable cost

A perfectly competitive firm is a price-taker because A. the government sets its price. B. it produces a differentiated product. C. a larger firm sets the price for the industry. D. intense competition prevents it from influencing the marker price. E. a powerful consumer group establishes the market price.

A permanent increase in demand ________ economic profit in the short run and some firms will ________ in the long run. A. does not change; exit the market B. increases; enter the market C. increases; raise their price D. does not change; advertise their good

Table in the text shows the demand schedule for Lin’s Fortune Cookies. Another table shows some cost data for Lin’s. Use this information to work on the problem. (Hint: Make a sketch of Lin’s short-run cost curves.)

Create Lin’s short-run supply schedule and make a graph of Lin’s short-run supply curve. Explain why only part of Lin’s short-run supply curve is the same as its marginal cost curve.

Figure in the text shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and table in the text shows the market demand schedule for toys.

At a market price of $12 a toy, how many toys does the firm produce and what is its economic profit in the short run? How will the number of firms in the market change in the long run?

Figure in the text shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and table in the text shows the market demand schedule for toys.

At a market price of $21 a toy, what quantity does the firm produce in the short run and does the firm make a positive economic profit, a zero economic profit, or an economic loss?

Table in the text shows the demand schedule for Lin’s Fortune Cookies. Another table shows some cost data for Lin’s. Use this information to work on the problem. (Hint: Make a sketch of Lin’s short-run cost curves.)

At a market price of $35.20 a batch, what quantity does Lin’s produce and what is the firm’s economic profit in the short run?

Use Table 1, which shows Martha’s total utility from burgers and pasta, to work Problems 4 to 6.

When Martha buys 3 burgers and 2 dishes of pasta a week, what is her total utility and her marginal utility from the third burger? If the price of a burger is $4, what is her marginal utility per dollar from burgers?

A firm’s short-run supply curve is the same as ________ if it produces the good. A. its marginal revenue curve B. the upward-sloping part of its marginal cost curve C. its marginal cost curve above minimum average variable cost D. its marginal cost curve above minimum average total cost

In the short run, the profit-maximizing firm will ________. A. break even if marginal revenue equals marginal cost B. make an economic profit if marginal cost is less than average total cost C. incur an economic loss if average fixed cost exceeds marginal revenue D. incur an economic loss if average total cost exceeds marginal revenue

Use Table 2 and the following information to work Problems 5 to 7. Suppose that the government redistributes income by taxing the 60 percent of households with the highest market incomes 10 percent, then distributing the tax collected as an equal benefit to the 40 percent with the lowest market income.

TABLE 2

If the people whose market incomes are taxed cut their work hours and their market incomes fall by 10 percent, what is the distribution of income after taxes and benefits?

Table in the text shows the demand schedule for Lin’s Fortune Cookies. Another table shows some cost data for Lin’s. Use this information to work on the problem. (Hint: Make a sketch of Lin’s short-run cost curves.)

At a market price of $50 a batch, what quantity does Lin’s produce and what is the firm’s economic profit in the short run?

Suppose that the restaurant industry is perfectly competitive. Joe’s Diner is always packed in the evening but rarely has a customer at lunchtime. Why doesn’t Joe’s Diner close—temporarily shut down—at lunchtime