Micro Econs_Chap 12

A market is perfectly competitive if

• each firm in it can influence the price of its product.

• there are many firms in it, each selling a slightly different product.

• there are many firms in it, each selling an identical product.

• there are few firms in the market.

Perfect competition implies that

• there are many firms in the market.

• all firms are price takers.

• all firms are producing the same identical product.

• All of the answers are correct.

For a perfectly competitive firm, no matter how much the firm produces, price always equals

• marginal product.

• average total cost.

• minimum average total cost.

• marginal revenue.

At a firm's break-even point, its

• total revenue equals its total opportunity cost.

• marginal revenue exceeds its marginal cost.

• marginal revenue equals its average variable cost.

• marginal revenue equals its average fixed cost.

A perfectly competitive firm maximizes its profit by

• setting its price so that it exceeds the marginal revenue.

• choosing to produce the quantity that sets MC equal to MR.

• cutting wages.

• manipulating demand.

Charlie's Chimps is a perfectly competitive firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's produces 100 chimps. The marginal cost of the 100th chimp is $9. Charlie's ________.

• is maximizing its profit

• will maximize its profit if it produces more than 100 chimps

• will maximize its profit if it lowers the price to $9 a chimp

• will maximize its profit if it produces fewer than 100 chimps

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

• total cost exceeds its total revenue.

• average total cost exceeds the price of the product.

• marginal revenue is less than the price of the product.

• marginal cost exceeds the price of the product.

A perfectly competitive firm shuts down if the price of its product is

• greater than its minimum average variable cost.

• less than its minimum average variable cost.

• greater than its maximum variable cost.

• less than its minimum total cost.

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

• minimum average variable cost, AVC.

• total variable cost, TVC.

• total fixed cost, TFC.

• average total cost, ATC.

In the short run, a perfectly competitive firm might

• set its price above marginal cost.

• set its price above marginal revenue.

• adjust the size of its fixed inputs.

• operate even though it is incurring an economic loss.