AP Micro Unit 3

Front

The demand curve for a perfectly competitive firm is:

Back

perfectly elastic.

Front

Zoe's Bakery determines that P < ATC and P > AVC. Zoe should:

Back

continue to operate even though she is taking an economic loss.

Front

What should you do? Options: Shut Down, Take loss but stay open, Stay open, Normal Profit, Stay open, Positive Economic Profit

Back

Stay open, Normal Profit

Front

What should you do? Options: Shut Down, Stay open and take a loss, Stay open, Positive Economic Profit, Stay open, Normal Profit

Back

Shut Down

Front

All of the following are essential characteristics of a perfectly competitive industry EXCEPT: All products produced by the firms in the industry are homogeneous. All firms in the industry are price takers. Price is equal to marginal revenue for every firm in the industry. There are barriers to entry into and exit from the industry.

Back

There are barriers to entry into and exit from the industry.

Front

Based on the cost and output data in the table shown, a perfectly competitive firm will shut down if price falls below: $15

Back

$15

Front

A profit-maximizing firm will shut down in the short run any time the firm’s total revenue is less than its:

Back

total variable cost

Front

In the short run, the firm will realize an economic loss but will continue to produce if the price is: between P2 and P3

Back

between P2 and P3

Front

How do firms in monopolistic competition try to make their products stand out?

Back

They use nonprice competition such as advertising.

Front

How does the profit-maximizing behavior of a monopolistic competitor compare to that of perfect competitors, oligopolies, and monopolies?

Back

They all try to find the level of output where their marginal cost is equal to their marginal revenue.