AP Microeconomics Perfect Competition

Based on the table, at what quantity of output does the firm start to earn a profit?

• 1

• 2

• 3

• 4

Based on the table, the firm's average total costs decrease over what range of outputs?

• 1-4

• 1-5

• 1-6

• 1-8

Based on the table, the firm experiences increasing marginal returns over which range of outputs?

• 1-4

• 1-5

• 1-6

• 1-8

Based on the table, when does the firm start to experiences diminishing marginal returns?

• When it produces the 4th output

• When it produces the 5th output

• When it produces the 7th output

• When it produces the 2nd output

Based on the table, what output should a profit-maximizing firm produce?

• 10 units

• 12 units

• 4 units

• 5 units

What is the profit-maximization rule? "A firm should produce at the point where _____________"

In a perfectly competitive market, and increase in the supply of the good will lead to what change in marginal revenue for the firms?

• An increase in MR

• A decrease in MR

• MR will remain unchanged

• MR will depend on the number of firms

This perfectly-competitive firm, when producing at an output level of Q, is...

• earning economic profits

• earning economic losses

• earning diminishing marginal revenue

• I don't want to think of a 4th answer option

WARNING: DIFFICULT! Imagine these graphs represent the market for oranges. The price of tangerines, a substitute for oranges, increase in price. Show the impact this change has on the demand for oranges AND the marginal revenue of the given firm.

Draw the ATC, MC, and MR curves for a perfectly competitive firm that is earning economic losses