A purely competitive firm’s short-run supply curve is: |
upsloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve. |
For a purely competitive firm, total revenue: |
has all of these characteristics. |
The short-run supply curve of a purely competitive producer is based primarily on its: |
MC curve. |
On a per unit basis, economic profit can be determined as the difference between: |
product price and average total cost. |
The short-run supply curve for a purely competitive industry can be found by: |
summing horizontally the segments of the MC curves lying above the AVC curve for all firms. |
An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called: |
oligopoly |
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: |
will also be $5. |
Which of the following is not a characteristic of pure competition? |
Price strategies by firms. |
In which of the following industry structures is the entry of new firms the most difficult? |
Pure monopoly. |
A purely competitive seller is: |
a "price taker." |
Which of the following statements is correct? |
The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping. |
If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing: |
price and minimum average variable cost. |
A perfectly elastic demand curve implies that the firm: |
can sell as much output as it chooses at the existing price. |
The demand schedule or curve confronted by the individual, purely competitive firm is: |
perfectly elastic. |
In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. Refer to the information. For a purely competitive firm, total revenue graphs as a: |
straight, upsloping line. |
When a firm is maximizing profit, it will necessarily be: |
maximizing the difference between total revenue and total cost. |
The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______. |
downsloping; perfectly elastic |
Firms seek to maximize: |
total profit |
The MR = MC rule can be restated for a purely competitive seller as P = MC because: |
each additional unit of output adds exactly its price to total revenue. |
A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its: |
total variable costs. |
If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output: |
marginal revenue exceeds ATC. |
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: |
is realizing an economic profit of $40. |
In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. Refer to the information. For a purely competitive firm, marginal revenue graphs as a: |
straight line, parallel to the horizontal axis. |
A firm reaches a break-even point (normal profit position) where: |
total revenue and total cost are equal. |
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 is not a basic characteristic of pure competition? |
Considerable nonprice competition. |
A purely competitive seller should produce (rather than shut down) in the short run: |
if total revenue exceeds total cost or if total cost exceeds total revenue by some amount less than total fixed cost. |
(Consider This) An unprofitable motel will stay open in the short run if: |
price (average nightly room rate) exceeds average variable cost. |
ECON 202 Chapter 10
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