MC Ps SRATC PA SRAVC P3 P2 Pi вс DEF G H I A Quantity FIGURE 9-1 1) Refer to Figure 9-1. If the price a perfectly competitive firm is facing in the market is P2, then the profit-maximizing firm in the short run should produce output 1) A) В. В) С. C) D. D) E. E) F. 2) Suppose a perfectly competitive firm is producing where its average revenue is less than its lowest average variable cost. The firm should 2) A) shut down. B) increase the market price. C) reduce its output. D) expand its output. E) not change its output. Price $

Market Representative Firm S1 MC A my a MR = P $3.50 - - АТС $2.50 b. AVC D1 50,000 350 400 Quantity (Q) Output (Q) The diagram above depicts overall market supply and demand on the left, and the cost curves for a representative firm supplying in that market on the right. At the price $3.50, the firm: should shutdown. O is earning a negative economic profit (loss). is making neither a profit nor a loss. It is breaking even. O is earning a positive economic profit.

Use the following diagram, which shows the average and marginal cost structure of a perfectly competitive firm, to answer questions 28.) – 35.): Cost 15 B 12 10 10 15

4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.

1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: 2) A firm that is motivated by self interest should 3) If price is above the equilibrium level, competition among sellers to reduce the resulting 4) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to 5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement 6) In a market economy the distribution of output will be determined primarily by 7) In a competitive market economy firms will select the least-cost production technique because 8) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut…

1. Consider the case of a perfectly competitive industry with n identical firms. Each firm's total cost function is given by Ci(q) = 100 + 10q+q² The demand for the good is given by Qd = 400 - 4p a) Find the(long-run)equilibrium in the market. b) Calculate the equilibrium total surplus or welfare. 9 i = 1, ..., n

Use the figure below to answer the following question. Total revenue and total cost (dollars) 400 300 Z 200 100 Q 0 99 Quantity Figure 12.2.1 Refer to Figure 12.2.1, which shows a perfectly competitive firm's total revenue and total cost curves. Which one of the following statements is false? A) At an output of Q1 units a day, the firm makes zero economic profit. B) At an output less than Q1 units a day, the firm incurs an economic loss. OC) At an output of Q2 units a day, the firm incurs an economic loss. D) Economic profit is the vertical distance between the total revenue curve and the total cost curve. E) At an output greater than Q3 units a day, the firm incurs an economic loss. Main Content

In the above figure, the perfectly competitive firm's shutdown point is at a price of

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