Microeconomics Chapter 15 – Flashcards
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A market with a large number of sellers
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might be a monopolistic-ally competitive or perfectly competitive market
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One requirement for an industry to be perfectly competitive is that in the industry there..
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are many firms for whom the efficient scale of production is small.
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Monopolistic competition requires
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large number of firms competing by making similar but slightly different products
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In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. What is an example of a perfectly competitive firm's short-run decision?
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The profit-maximizing level of output
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Suppose Pat's Paints is a perfectly competitive firm. If Pat's Paint's marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat's total revenue equals
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$5
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Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie..
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can sell as much milk as she wants at $2.20 a gallon.
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As a perfectly competitive firm produces more and more of a good, its economic profit..
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first increases, then decreases.
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In a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do?
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Produce less output to earn more profit
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The market supply in the short run for the perfectly competitive industry is
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the sum of the supply schedules of all firms
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If a perfectly competitive firm's average total cost is less than the price, then the firm..
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makes an economic profit
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A perfectly competitive firm is producing 50 units of output and selling at the market price of $23. The firms average total cost is $20. What is the firms total cost.
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$1000
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When new firms enter the perfectly competitive Miami Bagel market, the market..
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supply curve shifts rightward
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When new firms enter a perfectly competitive market, the market supply curve shifts_____ and the price_______.
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rightward;falls
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In the long run, perfectly competitive firms will exit the market if the price is
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less than average total cost.
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Suppose a perfectly competitive market is in a short-run equilibrium. If some firms exit the market, the profit of the remaining firms _______; if some firms enter the market, the profit of each existing firm __________
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increases; decreases
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A market is initially in a long-run equilibrium and there is a permanent increase in demand. After the new long-run equilibrium is reached, there...
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are more firms in the market
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If perfectly competitive firms are earning an economic profit, then...
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new firms enter the market and the equilibrium profit of the firms already in the market decrease
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If a firm shuts down,
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the price is less than minimum average variable cost
