Pure competition

Flashcard maker : Lily Taylor
In a purely competitive industry:
there may be economic profits in the short run, but not in the long run.
In the short run the individual competitive firm’s supply curve is that segment of the
Marginal cost curve lying above the average variable cost curve
Which of the following will not hold true for a competitive firm in long-run equilibrium?
P = AFC
If production is occurring where marginal cost exceeds price, the purely competitive firm will:
fail to maximize profit and resources will be overallocated to the product
For a purely competitive seller, price equals:
If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing:
price and the minimum of AVC
A purely competitive seller is:
is a “price taker”
The primary force encouraging the entry of new firms into a purely competitive industry is:
economic profits earned by firms already in the industry.
Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:
Suppose you find that the price of your product is less than minimum AVC. You should:
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:
Allocative efficiency is achieved when the production of a good occurs where:
P=MC
A firm reaches a break-even point (normal profit position) where
If for a firm P = minimum ATC = MC, then:
Which of the following is not a basic characteristic of pure competition?
Innovations that lower production costs or create new products:
If the price of product Y is $25 and its marginal cost is $18:
A purely competitive firm is precluded from making economic profit in the long run because
If a purely competitive constant-cost industry is realizing economic profits, we can expect industry supply to:
increase, output to increase, price to decrease, and profits to decrease.
The demand curve in a purely competitive industry is _____, while the demand curve to a single firm in that industry is _____.
downsloping, perfectly elastic
A purely competitive firm is precluded from making economic profit in the long run because:
If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing
Under pure competition in the long run:
If production is occurring where marginal cost exceeds price, the purely competitive firm will
In the short run the individual competitive firm’s supply curve is that segment of the:
A firm reaches a break-even point (normal profit position) where:

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