Economics: Perfect Competition Concepts

<p>The aggregate demand and supply in the market. (C)</p> Signup and view all the answers

<p>They act as price takers. (A)</p> Signup and view all the answers

<p>There are many buyers and sellers. (A)</p> Signup and view all the answers

<p>One firm has a significant market share. (C)</p> Signup and view all the answers

<p>They cannot influence the price at all. (D)</p> Signup and view all the answers

<p>Increase output (C)</p> Signup and view all the answers

<p>$6,000 (B)</p> Signup and view all the answers

<p>The price is greater than average variable costs (B)</p> Signup and view all the answers

<p>Optimal-output (C)</p> Signup and view all the answers

<p>No output; loss (D)</p> Signup and view all the answers

<p>Lower; minimum (A)</p> Signup and view all the answers

<p>It is beneficial to gain future profits (D)</p> Signup and view all the answers

<p>Earning a small economic profit (A)</p> Signup and view all the answers

<p>$20 (B)</p> Signup and view all the answers

<p>Farm commodities (C)</p> Signup and view all the answers

<p>Government increasing regulations for new businesses. (A), Geographical barriers restrict access to markets. (C), High startup costs deter new firms from entering. (D)</p> Signup and view all the answers

<p>Price and marginal revenue are always equal. (D)</p> Signup and view all the answers

<p>Decrease production levels. (C)</p> Signup and view all the answers

<p>It will experience a surplus and eventually have to lower its price. (A)</p> Signup and view all the answers

<p>Large number of buyers and sellers. (B)</p> Signup and view all the answers

<p>Greater than average variable cost. (D)</p> Signup and view all the answers

<p>Firms optimizing resource allocation in the short run. (A)</p> Signup and view all the answers

<p>Imperfect information among buyers and sellers. (B)</p> Signup and view all the answers

<p>Price is below average total cost. (B)</p> Signup and view all the answers

<p>Total revenue increases proportionally to output. (D)</p> Signup and view all the answers

<p>The total revenue equals the total cost. (B)</p> Signup and view all the answers

<p>Where marginal cost equals price. (B)</p> Signup and view all the answers

<p>Marginal cost starts to rise with increased output. (C)</p> Signup and view all the answers

A firm that cannot influence the market price of the good it sells. It accepts the prevailing market price as given.

The conditions that define a perfectly competitive market: many buyers and sellers, standardized product, free entry and exit, perfect information.

Perfect competition is characterized by the inability of any one firm to influence the price, leading to fierce price competition and no need for advertising or brand recognition.

A key assumption of perfect competition where all goods in the market are identical, offering no differentiation between sellers.

A condition in perfect competition where firms can easily enter or exit the market, responding to profit opportunities or losses.

An assumption of perfect competition where all market participants have complete and accurate information about prices, products, and production costs.

Firms in perfect competition are price takers because they have no ability to influence the market price due to the presence of many other firms selling identical products.

The market price in perfect competition is determined by the forces of supply and demand, with no individual firm having enough power to influence it.

A firm maximizes profits in the short run by producing at the output level where marginal revenue (MR) equals marginal cost (MC).

A firm's short-run profit is calculated as total revenue (TR) minus total cost (TC).

The shutdown point is the minimum point on the average variable cost (AVC) curve. A firm will shut down in the short run if the price falls below this point.

A market structure where many firms sell identical products, no firm has market power, and there are no barriers to entry or exit.

The short-run supply curve of a perfectly competitive firm is the portion of the marginal cost curve that lies above the shut-down point.

Economic profit is the difference between total revenue and total cost, including both explicit and implicit costs.

The break-even point is the output level where a firm's total revenue equals total cost, resulting in zero economic profit.

A perfectly competitive firm will continue to produce in the short run as long as the price (P) is greater than the average variable cost (AVC).

The optimal output level for a firm is achieved when marginal revenue (MR) equals marginal cost (MC). This is the point where profit is maximized or losses are minimized.

Markets with many firms selling identical products, low barriers to entry, and little to no market power are considered the most competitive.

The ability of a firm to influence the market price of its product. In perfect competition, firms are price takers, meaning they have no control over the price.

Products that are perceived as unique by consumers, even if they are similar in function. In perfect competition, goods are homogeneous, meaning they are identical.

The ability of firms to easily enter and exit a market. This is a key characteristic of perfect competition.

The goal of firms in perfect competition is to maximize their profits. This is achieved by producing at the output level where marginal revenue equals marginal cost.

The additional revenue earned from selling one more unit of a product. In perfect competition, marginal revenue is equal to the market price.

The additional cost incurred from producing one more unit of a product.

The output level where a firm maximizes its profits. This occurs where marginal revenue equals marginal cost (MR = MC).

The point at which a firm in perfect competition will cease operations in the short run. This occurs when price falls below average variable cost.

The state of a perfectly competitive market where firms are earning zero economic profits. This results in no incentive for firms to enter or exit the industry.

The total amount of money a firm earns from selling its products. In perfect competition, total revenue is equal to price multiplied by quantity.

The total cost of producing a given quantity of output. This includes both fixed costs and variable costs.