ECON 1000 Study Guide - Final Guide: Market Power, Competitive Equilibrium, Marginal Revenue

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ECON 1000 Full Course Notes

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Econ1000 lecture 16 chapter 12: perfect competition objectives: Effects of a change in demand and of a technological advancement. Established firms have no advantages over new ones. Each firm is a price taker ; cannot influence the price of a good/service. Each firm"s output is a perfect substitute for the output of the other firms, so the demand for each firm"s output is perfectly elastic. The goal of each firm is to maximize economic profit, which equals total revenue minus total cost. Total cost is the opportunity cost of production, which includes normal profit. A firm"s total revenue equals price, p, multiplied by quantity sold, q, or p x q. A firm"s marginal revenue is the change in total revenue that results from a one-unit increase in the quantity sold. The firm"s loss equals total fixed cost (tfc) plus total variable cost (tvc) minus total revenue (tr). Economic loss = tfc + tvc tr.

Related Questions

1. When a profit-maximizing firm produces, they will be producing at that output at which marginal cost = marginal revenue:

all of the time
some of the time
on rare occasions
none of the time

2. Economics Profit is:

the same as accounting profit
sales minus explicit costs and implicit costs
sales minus variable costs and fixed costs
opportunity cost only

3. A market structure with so many firms that no one firm has any influence over price, and firms produce an identical product is called:

monopoly
oligopoly
perfect competition
monopolistic competition

4. Which of the following is NOT a characteristic of a perfectly competitive market?

identical products
perfect mobility
perfect knowledge
price maker

5. The demand curve in a perfectly competitive market is perfectly elastic.

true
false

emeraldwombat313

Match the following.

constant-cost industry	A market structure in which a large number of firms sell a homogenous product or service with no restrictions on entry or exit and each firm is a price-taker.
increasing-cost industry	The demand facing a price-taking firm.
long-run equilibrium	A firm produces zero output but must still pay its fixed costs.
marginal revenue product	Price below which a firm shuts down in the short run.
perfect competition	All firms produce where price equals long-run marginal cost, and economic profits are zero.
perfectly elastic demand	Industry in which input prices rise as all firms in the industry expand output.
shut down	Industry in which input prices remain constant as all firms in the industry expand output.
the shut-down price	The additional revenue earned by hiring one more unit of a variable input.

viridianhare336

In a perfectly competitive market, assume every firm faces the same short run total cost curve: TC= 2q^2 + 10q + 200. The market demand curve is :Qd = 800-8P. Given perfect competition, if this industry is in long run equillibrium:

1) Find the level of output produced by each firm

2) Find the market price of the output.

3) Find the total industry output adn the number of firms in the market.

4) How much economic profit does each firm in this market make?

sangriahare446

ECON 1000 Study Guide - Final Guide: Market Power, Competitive Equilibrium, Marginal Revenue

ECON 1000 Full Course Notes

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