# ECON 202 Chapter 10

Total word count: 651
Pages: 2

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 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.

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