Chapter 11: Perfect Competition Essay Example
Chapter 11: Perfect Competition 1 Being a price taker in a market means that the seller 1. charges each consumer the maximum that she will be able to pay for the product.
2. has no choice but to charge the equilibrium price that results from the market supply and demand curves.
3. takes her price from her average total cost curve.
4. sells her products at different prices to different customers. 2 For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. It follows that the 1. production of the 100th unit of output increases the firm's profit by $3.
2. production of the 100th unit of output increases the firm's average total cost by $7.
3. firm's profit-maximizing level of output is less than 100 units.
4. production of the 99th unit of output must increase the firm’s profit by less than $3. 3 Charlene sells cotton candy. The cotton candy industry is competitive. Charlene hires a business consultant to analyze her company’s financial records. The consultant recommends that Charlene increase her production. The consultant must have concluded that Charlene’s 1. total revenues exceed her total accounting costs.
2. marginal revenue exceeds her total cost.
3. marginal revenue exceeds her marginal cost.
4. marginal cost exceeds her marginal revenue. 4 Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance. Prior to the 2008 shrimp harvesting season, Shrimp Galore's accountant predicted that at expected market prices for shrimp, Shrimp Galore would have a net loss of $75,000 dollars after paying all 2008 expenses (including the annual loan payment). In this case, Shrimp Galore should a. produce nothing and experience a loss of $25,000.
b. produce nothing and experience a loss of
2. has no choice but to charge the equilibrium price that results from the market supply and demand curves.
3. takes her price from her average total cost curve.
4. sells her products at different prices to different customers. 2 For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. It follows that the 1. production of the 100th unit of output increases the firm's profit by $3.
2. production of the 100th unit of output increases the firm's average total cost by $7.
3. firm's profit-maximizing level of output is less than 100 units.
4. production of the 99th unit of output must increase the firm’s profit by less than $3. 3 Charlene sells cotton candy. The cotton candy industry is competitive. Charlene hires a business consultant to analyze her company’s financial records. The consultant recommends that Charlene increase her production. The consultant must have concluded that Charlene’s 1. total revenues exceed her total accounting costs.
2. marginal revenue exceeds her total cost.
3. marginal revenue exceeds her marginal cost.
4. marginal cost exceeds her marginal revenue. 4 Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance. Prior to the 2008 shrimp harvesting season, Shrimp Galore's accountant predicted that at expected market prices for shrimp, Shrimp Galore would have a net loss of $75,000 dollars after paying all 2008 expenses (including the annual loan payment). In this case, Shrimp Galore should a. produce nothing and experience a loss of $25,000.
b. produce nothing and experience a loss of