please enter the numbers from the word bank that corresponds to the word or phra
ID: 1167276 • Letter: P
Question
please enter the numbers from the word bank that corresponds to the word or phrase that correctly fills in the blank
QUESTION 1
The market demand curve for a good or service produced by an industry of purely competitive firms is (refers to direction of slope), whereas the demand curve for a good or service produced by any particular firm in that industry is . That's because there are many in that industry producing a goods or services that are (i.e., indistinguishable from one another). Under such conditions, the only factor that would determine from whom a customer would buy the product would be its . As a result, each firm within a purely competitive industry is a price -- that is, has no ability to control the price it charges. If a particular firm tried to charge a price that was once cent higher than the market price, it would, hypothetically, sell (enter number from Word Bank that corresponds with the answer, not actual amount) units of output.
14 points
QUESTION 2
If the market price (or its average revenue) were greater than the firms' , that firm would be making economic . This would cause other firms to the industry because in a purely competitive industry there are no restricting the mobility of resources. As this occurred, the supply of the product would and thus the price would .
12 points
QUESTION 3
On the other hand, if the market price (or average revenue) were below the firms' , they would experience an . This might cause any particular firm to the industry. This would certainly happen if the product's price was less than . However, if the product's price were less than ATC but greater than , the entrepreneur would , despite the fact that he is taking an . That's because if the firm were to under those circumstances, his losses would be than they would be if he continued producing.
18 points
QUESTION 4
Refer to Graph 1 on the Resource Sheet. The current demand curve, D(1), is also the firm's curve and curve. Given this demand for this firm's product, the firm will charge a price of (P1-3 -- enter number from Word Bank, do not enter letter ) and will produce (a-e -- enter number from Word Bank, do not enter letter) units of output. That's because it is profitable to produce all products for which the exceeds the . The firm will stop producing when the former no long exceeds the latter -- that is, when the two are . As you can see by the difference between AR and ATC, given this price/quantity combination, the firm is earning .
16 points
QUESTION 5
, in a perfectly industry, are not sustainable in the long run. That's because other firms are free to the industry. As they do, the supply of the product will causing the price of the product (and the demand curve) to . If the price falls to something just above P2 on the graph, the firm will still be making and other firms will continue to the industry, causing both the product and the demand curve for the product to continue to .
18 points
QUESTION 6
If, on the other hand, the entry by other firms into the caused the product price to fall somewhere between P2 and P3, the firm would now be experiencing . With the product price within that range, firms would because P> . That's because even if the firm , it would still incur obligations, which do not expire when a firm stops producing. As long as marginal revenue was taking a bite out of fixed costs because it was covering , the firm will not . It certainly would, however if the product price fell to (P1-3 -- enter number from Word Bank, do not enter letter ) or below.
18 points
QUESTION 7
Eventually, however, the fixed costs obligations of some firms will expire and they will take this opportunity to the industry. When they do, supply will go down, price will go up, and in equilibrium, the firm will be making a .
4 points
QUESTION 8
In pefectly competitive markets, productive (or technical) efficiency is achieved:
A.
When firms are in equilibrium, there is no entry of firms into (or exit of firms from) the industry.
B.
When firms are in equilibrium, they produce at the lowest average (or per unit) cost.
C.
When firms are in equilibrium, firms are earning normal profits.
D.
When firms are in equilibrium, P = MC.
1 points
QUESTION 9
The perfectly competitive industry achieves "allocative efficiency" because:
P=MC at equilibrium
Firms produce at the lowest ATC at equilibrium
There is no entry or exit of firms at equilibrium.
Economic profits are zero at equilibrium.
1 points
QUESTION 10
Which of the following industries comes closest to being purely competitive?
A.
Steal smelting and manufacturing
B.
Agriculture
C.
Retail clothing
D.
Commercial airlines
ECN 2040, Quiz 6
Word Bank
If you fill in the blanks with words, the grading algorithm will mark your answer as incorrect.
Make sure that there are no blanks spaces before or after the number when you enter it.
GRAPH 1
1
a
21
elastic
41
marginal revenue
2
b
22
enter
42
market participants
3
c
23
equal
43
more
4
d
24
equal to
44
normal profit
5
e
25
equals
45
perfectly elastic
6
P(1)
26
exit
46
price
7
p(2)
27
fall
47
productive
8
P(3)
28
firms
48
profits
9
allocative
29
fixed cost
49
rise
10
average fixed cost
30
free entry and exit
50
sellers
11
average revenue
31
greater
51
shut down
12
average total cost
32
homogeneous
52
standardized
13
average variable cost
33
horizontal
53
taker
14
barriers or obstacles
34
industry
54
takers
15
buyers
35
leave
55
total cost
16
competitive
36
less
56
unique
17
continue producing
37
losses
57
unique characteristics
18
downward sloping
38
many
58
upward sloping
19
economic loss
39
marginal cost
59
variable cost
20
economic profit
40
marginal profits
60
zero
A.
When firms are in equilibrium, there is no entry of firms into (or exit of firms from) the industry.
B.
When firms are in equilibrium, they produce at the lowest average (or per unit) cost.
C.
When firms are in equilibrium, firms are earning normal profits.
D.
When firms are in equilibrium, P = MC.
Explanation / Answer
Q1.
18
33
46
53
60
Perfectly competitive market has downward sloping demand curve, but a firm in this industry will have horizontal demand curve. It means that demand in perfect competition, is perfectly elastic in nature.
Q2.
12
48
22
14
49
27
Economic profit is earned when price is higher than the ATC. It attracts new firms to the industry that increases the supply, and decrease the price, leading to the economic profit become zero in the long run equilibrium.
Q3.
12
19
26
13
13
17
19
26
43
If market price is greater than the ATC, then fir will earn economic profit, otherwise it will be loss to the firm. Though, the firms will continue to operate if market price is greater than the AVC, but below ATC in the short run.
Q4.
Graph 1 is not given, so it cannot be answered.
Q5.
16
48
22
49
27
20
22
27
In perfect competition, the economic profit in long run is zero, but in short run it is positive. After seeing the positive economic profit, new firms enter the industry, leading to the fall in the price and increase in price.
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