Save
Busy. Please wait.
Log in with Clever
or
show password
Forgot Password?
Don't have an account?  Sign up 
Sign up using Clever
or
Username is available taken
show password

Your email address is only used to allow you to reset your password. See our Privacy Policy and Terms of Service.

Already a StudyStack user? Log In

Reset Password
Enter the associated with your account, and we'll email you a link to reset your password.

Question

Definition of competitive market:
click to flip
focusNode
Didn't know it?
click below
 
Knew it?
click below
Don't know

Question

Definition of average revenue:
Remaining cards (22)
Know
0:00
edit
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

  Normal Size     Small Size show me how

ECON2302 - KC - Ch14

Economics Chapter 14 review

QuestionAnswer
Definition of competitive market: a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker.
Definition of average revenue: total revenue divided by the quantity sold.
Definition of marginal revenue: the change in total revenue from an additional unit sold.
Definition of sunk cost: a cost that has already been committed and cannot be recovered.
A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs. True or false? TRUE
A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost. True or false? TRUE
A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average variable cost but greater than the firm's average fixed cost. True or false? FALSE
Suppose a firm operating in a competitive market has the following cost curves: P1, P2, P3, P4. Firms will shut down in the short run if the market price is less than P1.
A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits. True or false? FALSE
Carol owns a running shoe store that operates in a perfectly competitive market. If running shoes sell for $120/pr and the avg total cost/pr is $125 at the profit-maximizing output level, then in the long run some firms will exit from the market.
Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost is $8, and the average total cost is $8.25. Mrs. Smith should continue to operate in both the short run and the long run.
When buyers in a competitive market take the selling price as given, they are said to be price takers.
In the long run, when price is greater than average total cost, some firms in a competitive market will choose to enter the market. True or false? TRUE
A firm is currently producing 100 units/day. The manager reports that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $5. The firm should continue to produce 100 units in order to maximize its profits. True or false? TRUE
The Doris Dairy Farm sells milk to a dairy broker in Prairie du Chien, WI. Because the market for milk is generally considered to be competitive, the Doris Dairy Farm does not choose the price at which it sells its milk.
The entry of new firms into a competitive market will increase market supply and decrease market price.
In competitive markets, firms that raise their prices are typically rewarded with larger profits. True or false? FALSE
A firm operating in a competitive market will stay in business in the short run so long as the market price exceeds the firm's average total cost; otherwise, the firm will shut down. True or false? FALSE
Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. At Q=500, the firm's profits equal $4,000
Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? marginal revenue equals $4 and Total revenue equals $1,600
A firm is currently producing 100 units/day. The manager reports that producing the 100th unit cost the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize loss) FALSE
Demand curve is $4 each across the board, quantity can change. A firm operating in a competitive market maximizes total revenue by producing as many units as possible.
In the short run, a firm operating in a competitive industry will shut down if price is less than average variable cost.
Created by: debra473
 

 



Voices

Use these flashcards to help memorize information. Look at the large card and try to recall what is on the other side. Then click the card to flip it. If you knew the answer, click the green Know box. Otherwise, click the red Don't know box.

When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.

If you've accidentally put the card in the wrong box, just click on the card to take it out of the box.

You can also use your keyboard to move the cards as follows:

If you are logged in to your account, this website will remember which cards you know and don't know so that they are in the same box the next time you log in.

When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. Although it may feel like you're playing a game, your brain is still making more connections with the information to help you out.

To see how well you know the information, try the Quiz or Test activity.

Pass complete!
"Know" box contains:
Time elapsed:
Retries:
restart all cards