When a perfectly competitive firm sells additional units of output, its total revenue will O increase at a constant rate O increase rapidly at first, then decline increase at an increasing rate O increase at a decreasing rate O remain constant
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- Figure 9-16 $/4 MC 6.70 6.00 ATC 4.90 AVC 4.00 = MR 2.80 2.60 12 14 If the price-taker fırm in Figure 9-16 9-16.png is currently producing 6 units, then to maximize profit in the short run, it should keep producing 6 units increase production to 12 units increase production to 14 units increase production to 8 units O shut downQUESTION 33 Consider a major producer of liquid soap. Which of the following would not shift its supply curve of liquid soap inward (to the left)? O a. A substitute in supply becomes more profitable O b. Environmental regulations requiring the producer to use a more costly technology to produce liquid soap O c. An increase in the wage rate for factory workers who produce liquid soap O d. A decrease in the price of liquid soapBecause perfectly competitive firms are price takers, a permanent increase in the market demand does not change the price of the product in either the short run or long run. O A. True O B. False
- Which of the following statements is TRUE? O Assume that wheat farmers operate in a competitive industry. A decrease in the cost of producing wheat will lead to greater profits for wheat farmers in the long run than in the short run. O A rational decision maker will never take sunk costs into account. A change in price will have no effect on total revenue when the own-price elasticity of demand is zero. O (From the perspective of the consumer) When the fixed fee increases, the quantity consumed will always decrease.What is a price taker? A price taker is O A. a firm with a downward-sloping demand curve. O B. a firm that is unable to affect the market price. Oc. a firm with a perfectly inelastic demand curve. O D. a firm that has the ability to charge price greater than marginal cost. O E. a firm that does not seek to maximize profits. When are firms likely to be price takers? A firm is likely to be a price taker when O A. it sells a differentiated product. O B. barriers to entry are substantial. OC. it has market power. O D. it represents a small fraction of the total market,. O E. firms in the industry collude.Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $8 per unit, the firm should produce O less than 100 units of output. O The amount is impossible to determine from the information given. O 100 units of output. O more than 100 units of output.
- Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market? The short-run average total costs of firms that are price takers will be constant. O If a price taker increased its price, consumers would buy from other suppliers. O Firms in a price-taker market will have to advertise in order to increase sales. There are no good substitutes for the product supplied by a firm that is a price taker.er 11 i Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice OO O the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged. 23 11,229 X OCT all Z AA perfectly competitive firm that makes car batteries has total fixed costs of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm's minimum AVC Is $105 per battery. The firm is currently producing 500 batteries a month (the output level at which MR=MC). This firm is making a O loss, shut down O profit, shut down O profit: increase O loss; increase and should. production
- Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. ? 30 8 COSTS AND REVENUE (Dollars per shirt) 25 15 O 10 0 0 1 2 5 QUANTITY (Shirts) 3 4 6 Kenji's profit is maximized when he produces 7 8 would maximize his profit) is $ which is maximizing quantity corresponds to the intersection of the last condition can also be written as Marginal Revenue shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit- curves. Because Kenji is a price taker, this Marginal CostThe following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (ATC) and the long-run average cost curve (LRAC); fom example, Q, marks the point of tangency between ATC, and LRAC. The orange point on ATC, indicates the firm's current output level in the short run (Q). ATC, ATC ATC LRAC ATC, ATC OUTPUT PER PERIOD COST PER UNITIf a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.