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Exam 12: Perfect Competition and the Supply Curve

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Question 151

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(Table: Total Cost and Output) The table describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.If the market price of a tub of ice cream is $50, how much is Sergei's profit at the profit-maximizing output? A.$680 B.$330 C.$150 D.$40

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Question 152

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The short-run industry supply curve is more elastic than the long-run industry supply curve.

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Question 153

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(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots.During the winter, Alexa runs a snow-clearing service, and snow clearing is a perfectly competitive industry.The table provided shows her variable costs for snow clearing and number of lots cleared.Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel, her time, and hot coffee.If the price to clear a lot is $30, how many lots should Alexa clear? A.50 B.40 C.30 D.20

Figure: The Profit Maximizing Firm (Figure: The Profit Maximizing Firm) Look at the figure The Profit Maximizing Firm.The figure shows cost curves for a firm operating in a perfectly competitive market.Which of the following statements is true? A.AFC is represented in this figure by the vertical distance between curve M and curve N at any level of output. B.AFC is represented in this figure by the vertical distance between curve N and curve O at any level of output. C.This figure illustrates the long run because all costs are variable. D.Quantity Q₂ is to the left of the shut-down point.

Explain how the long-run perfectly competitive equilibrium is efficient.

(Table: Variable Costs for Lawns) Look at the table Variable Costs for Lawns.During the summer Alex runs a lawn-mowing service, and lawn-mowing is a perfectly competitive industry made up of 100 identical firms.The table shows his variable costs for lawn-mowing and the number of lawns mowed.Alex's fixed cost is $1,000 for the mower.His variable costs include fuel, his time, and mower parts.If the price for mowing a lawn is $40, how much is Alex's total revenue at the profit-maximizing output? A.$1,000 B.$1,200 C.$500 D.$1,500

Mikail's perfectly competitive camera memory card-producing factory is making positive economic profits.If the price of memory cards is $9, Mikail's output is 3,000 cards a month, and his monthly average total cost is $7, what are his monthly profits? A.$6,000. B.$27,000. C.$21,000. D.$2.

(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots.During the winter, Alexa runs a snow-clearing service, and snow clearing is a perfectly competitive industry.The table provided shows her variable costs for snow clearing and number of lots cleared.Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel, her time, and hot coffee.If the price per cleared lot is $14, how many lots should Alexa clear? A.0 B.40 C.50 D.20

(Table: Total Cost and Output) The table describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.If the market price of a tub of ice cream is $67.50, how much is Sergei's total cost at the profit-maximizing output? A.$270 B.$170 C.$135 D.$67.50

(Table: Variable Costs for Lawns) Look at the table Variable Costs for Lawns.During the summer Alex runs a lawn-mowing service, and lawn-mowing is a perfectly competitive industry made up of 100 identical firms.The table shows his variable costs for lawn-mowing and the number of lawns mowed.Alex's fixed cost is $1,000 for the mower.His variable costs include fuel, his time, and mower parts.If the price for mowing a lawn is $40, how much is Alex's profit at the profit-maximizing output? A.-$10 B.-$300 C.$300 D.-$1,000

(Table: Short-Run Supply Curve) Look at the table Short-Run Supply Curve.The table lists three supply points for an individual, perfectly competitive firm operating in the short run.If the industry is composed of 120 identical firms, which of the following will be a point on the short-run industry supply curve? A.Price = $5; quantity = 1,650. B.Price = $1,200; quantity = 40. C.Price = $960; quantity = 3,840. D.Price = $10; quantity = 4,800.

Figure: The Perfectly Competitive Firm (Figure: Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit.Given the market price, the firm's total cost per day is: A.$475. B.$600. C.$900. D.$1,200.

Figure: The Perfectly Competitive Firm (Figure: Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit.If the firm faces a market price of $3, its total profit per day is: A.$0. B.$250. C.$275. D.$300.

(Table: Total Cost and Output) The table describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.If the market price of a tub of ice cream is $67.50, how much is Sergei's profit at the profit-maximizing output? A.$680 B.$270 C.$102.50 D.$100

Figure: Cost Curves for Corn Producers (Figure: Cost Curves for Corn Producers) Look at the figure Cost Curves for Corn Producers.The market for corn is perfectly competitive, and an individual corn farmer faces the cost curves shown in the figure.If the price of a bushel of corn in the market is $4, then the farmer will produce ________ of corn and earn an economic ________ equal to _. A.0 bushels; loss; average fixed costs B.0 bushels; loss; total fixed costs C.3 bushels; loss; $30 per bushel D.3 bushels; profit; $20 per bushel

A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if the price is: A.greater than the average fixed cost. B.less than marginal cost. C.greater than average variable cost, but less than average total cost. D.greater than average total cost.

When a perfectly competitive firm is in long-run equilibrium, the firm is producing at:

________ almost always take the market price as given, or are considered , but this is often not true of _. A.Consumers; quantity-minimizers; producers B.Producers; quantity-takers; consumers C.Consumers and producers; price-takers; firms that produce a differentiated product D.Producers; price-searchers; consumers

Suppose a perfectly competitive firm can increase its profits by increasing its output.Then it must be true that the firm's: A.marginal revenue exceeds its marginal cost. B.price exceeds its average variable cost but is less than average total cost. C.marginal cost exceeds its marginal revenue. D.price exceeds its marginal revenue.

(Table: Lilly's Apple Orchard) Look at the table Lilly's Apple Orchard.Lilly is the price-taking owner of an apple orchard; the orchard's variable costs are given in the table.Her orchard has fixed costs of $30.If the price of a bushel of apples is $85, we would expect: A.total industry output to rise and Lilly's output to rise in the long run. B.total industry output to fall and Lilly's output to fall in the long run. C.total industry output to fall and Lilly's output to rise in the long run. D.total industry output to rise and Lilly's output to fall in the long run.