ECON 2000: Survey of Economics - Lecture 6: Firms in Competitive Markets
8 Questions
2 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the defining characteristic of a competitive market?

  • Few buyers and sellers
  • Barriers to entry
  • Identical products (correct)
  • Price setters

    • In the short run, when should a competitive firm shut down?

  • When marginal cost is greater than average total cost
  • When price (P) is greater than average variable cost (AVC)
  • When total revenue (TR) is less than average total cost (ATC)
  • When total revenue divided by quantity (TR/Q) is less than variable cost per unit (VC/Q) (correct)

    • What is the long-run decision for a competitive firm when total revenue is less than total cost?

  • Lower prices
  • Increase production
  • Maintain current operations
  • Exit the market (correct)

    • Why do competitive firms stay in business even if they make zero profit?

    <p>To maintain market share</p> Signup and view all the answers

    What does a firm's supply curve represent in a competitive market?

    <p>Marginal cost</p> Signup and view all the answers

    At what quantity is the average-total-cost curve at its minimum?

    <p>At the point where marginal cost equals average total cost</p> Signup and view all the answers

    What is the key condition for a firm to enter a competitive market?

    <p>Price greater than average total cost</p> Signup and view all the answers

    What should a competitive firm do in the short run if price is less than average variable cost?

    <p>Shut down temporarily</p> Signup and view all the answers

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser