Chpt 8

The term ____ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

• price setter

• business entity

• price taker

• trend setter

if a firms revenue do not cover its average variable costs, then that firm has reached its___.

• price taking point

• shutdown point

• marginal point

• opportunity margin

in economics, the term "shutdown point" refers to the point where the...

• marginal cost curve crosses the total revenue curve.

• average variable cost curve crosses the total revenue curve

• average variable cost curve crosses the marginal cost curve.

• marginal cost curve crosses the average variable cost curve.

When a business adopts a strategy of reducing and/or discontinuing production in response to a

sustained pattern of losses, it is...

• considering opportunity costs.

• preparing to exit operations.

• preparing to reach its shutdown point.

• considering capital investments.

The fact that a consumer is not required to buy the goods that a given firm produces, as well as

the fact that the consumer might want the goods a firm produces, but may choose to buy from

other firms instead...

• will reduce the revenue a firm receives and it should shut down.

• means the firm has reached it shutdown point and should exit.

• part of the process to a sustained pattern of profits.

• are two stark realities any business firm must recognize.

It is said that in a perfectly competitive market, raising the price of a firm's product from the

prevailing market price of $179.00 to $199.00,____.

• will likely cause the firm to reach its shutdown point immediately

• will cause the firm to recover some of its opportunity costs

• could likely result in a notable loss of sales to competitors

• is a sure sign the firm is raising the given price in the market

If a perfectly competitive firm is a price taker, then___.

• pressure from competing firms will force acceptance of the prevailing market price.

• it must be a relatively small player compared to its competitors in the overall market.

• it can increase or decrease its output without affecting overall quantity supplied in the market.

• quality differences will be very perceptible and will play a major role in purchasers' decisions.

In the___, the perfectly competitive firm will seek out___.

• long run; the quantity of output where profits are highest

• short run; profits by ignoring the concept of total cost analysis

• short run; the quantity of output where profits are highest

• long run; methods to reduce production and shut down

Idaho farmers can sell as large a quantity of their potato crop as they wish,___

• if they set their own price in the short run, but in the long run, the market sets the price.

• provided each is willing to accept the prevailing market price.

• if they set their own price in the long run, but in the short run, the market sets the price.

• provided quality is perceptible and determines the market price.

In the___the perfectly competitive firm will react to profits by___.

• short run; increasing quality of products

• long run; tailoring their quality controls

• short run; reducing its labor inputs

• long run; increasing its production