Ch.15 MicroEcon Flashcard

Front

A competitive market is in long-run equilibrium. If demand decreases, what will happen to the price?

Back

Price will fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.

Front

In a competitive market with many identical firms and no limited resources, what happens to price when demand increases?

Back

Increase price in the short run but not in the long run.

Front

When should a firm in a competitive market shut down based on cost curves?

Back

When the market price is less than $6.

Front

Refer to Figure 14-1. The firm will earn a negative economic profit but remain in business in the short run if the market price is

Back

less than $13 but more than $6.

Front

If the market price is $10, what is the firm's total cost?

Back

$35

Front

If the market price is $10, what is the firm's total revenue?

Back

$50

Front

Suppose a firm operating in a competitive market has the following cost curves: Refer to Figure 14-2. The firm will earn zero economic profit if the market price is

Back

$6.

Front

In the short run, if the market price is P4, individual firms in a competitive industry will earn

Back

zero profits.

Front

In a market with 100 identical firms, what is the value of Q2 as depicted in Figure 14-4, where graph (a) shows the linear marginal cost (MC) and graph (b) shows the linear market supply curve?

Back

20,000

Front

Refer to Figure 14-7. If the market starts in equilibrium at point Z in graph (b), a decrease in demand will ultimately lead to

Back

fewer firms in the market.