Question 1

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

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-Acme is a perfectly competitive firm. It...

Question 2

-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

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-Jimmy grows corn. His total revenue and...

Question 3

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure.
a) What is Farmer Brown's total revenue?
b) What is Farmer Brown's marginal revenue?

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-Farmer Brown produces corn in a perfectly...

Question 4

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit.
a) Find the profit maximizing level of output for this firm.
b) How much economic profit is the firm making?

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-The above table gives the quantity of...

Question 5

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

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-The above table shows the total cost...

Question 6

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?

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Question 7

Suppose a farmer raising beef is making a normal profit. Then, because of a scare about mad cow disease, the demand for beef decreases drastically. What happens to the profits of the beef farmer in the short run and in the long run?

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Question 8

John keeps beehives and sells 100 quarts of honey per month. The honey market is perfectly competitive, and the price of a quart of honey is $10. John has an average variable cost of $5 and an average fixed cost of $3. At 100 quarts per month, John's marginal cost is $10.
a) Is John maximizing his profit? If not, what should John do?
b) Calculate John's total revenue, total cost, and total economic profit or economic loss when he produces 100 quarts of honey.

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Question 9

-The above table gives Amy's total cost schedule for producing holiday wreaths. Amy is a perfect competitor and can sell each wreath for $9.
a) Complete the table by calculating Amy's total revenue and her profit or loss schedule.
b) When Amy is producing 4 wreaths, what is her total cost? What is her total revenue? What is her economic profit or economic loss?
c) What number of wreaths maximizes Amy's profit?

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-The above table gives Amy's total cost...

Question 10

-Acme is a perfectly competitive firm. It has the total cost schedule given in the above table. Acme's product sells for $8.00 per unit. What amount of output is the most profitable and what is Acme's economic profit or economic loss?

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-Acme is a perfectly competitive firm. It...

Question 11

-Pete is a perfectly competitive rose grower. The above table gives quantities and the price for which Pete can sell his roses.
a) What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b) What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

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-Pete is a perfectly competitive rose grower....

Question 12

How does a decrease in the demand for wheat ultimately lead to normal profits for wheat growers in the long run?

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Question 13

Pumpkin growing is a perfectly competitive industry. Suppose that pumpkin growers are all incurring an economic loss. What happens as time passes? What is the long-run equilibrium outcome?

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Question 14

-The above figure illustrates a perfectly competitive wheat farmer.
a) What will be the firm's profit-maximizing price and output?
b) When the farmer produces 25,000 bushels of wheat, the difference between the firm's average total cost and the price is at its maximum. Explain why this amount of wheat either is or is not the profit-maximizing quantity.

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-The above figure illustrates a perfectly competitive...

Question 15

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

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Question 16

Entry by competitive firms decreases the market price, while exit by competitive firms increases the market price. Explain why firms enter or exit an industry and why these price changes occur.

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Question 17

-Cory's is one of many ice cream stands in town. Cory's costs are shown in the table above.
a) If the market price of ice cream is $1.75 per cone, what is Cory's profit-maximizing quantity of cones?
b) If the market price of ice cream is $2.25 per cone, what is Cory's profit-maximizing quantity of coins?
c) If the market price of ice cream is $2.75 per cone, what is Cory's profit-maximizing quantity of coins?
d) Can you determine any points on Cory's supply curve?

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-Cory's is one of many ice cream...

Question 18

When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?

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Question 19

-The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?

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-The above diagram shows the cost curves...

Question 20

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

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-Acme is a perfectly competitive firm. It...

Quiz 12: Perfect Competition

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a) What is Farmer Brown's total revenue? b) What is Farmer Brown's marginal revenue?

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a) Find the profit maximizing level of output for this firm. b) How much economic profit is the firm making?

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?

Suppose a farmer raising beef is making a normal profit. Then, because of a scare about mad cow disease, the demand for beef decreases drastically. What happens to the profits of the beef farmer in the short run and in the long run?

-Acme is a perfectly competitive firm. It has the total cost schedule given in the above table. Acme's product sells for $8.00 per unit. What amount of output is the most profitable and what is Acme's economic profit or economic loss?

How does a decrease in the demand for wheat ultimately lead to normal profits for wheat growers in the long run?

Pumpkin growing is a perfectly competitive industry. Suppose that pumpkin growers are all incurring an economic loss. What happens as time passes? What is the long-run equilibrium outcome?

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

Entry by competitive firms decreases the market price, while exit by competitive firms increases the market price. Explain why firms enter or exit an industry and why these price changes occur.

When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?

-The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?