From the list on your right select the letter that contains the word, phrase, na

Question

From the list on your right select the letter that contains the word, phrase, name, etc that best matches the word, phrase, name, etc listed on the left. A. Shutdown because Price is below Average Variable Cost A firm in a perfectly competitive market The market demand curve in a perfectly competitive market B Perfectly elastic long-run supply curve Produce the output level where MR- MC MR MC; reduce output D Profit maximization rule E. The last unit of a good produced added more to total cost than In the short-run if Price is below Average Cost and above Average Variable Cost add to total revenue F. Downward sloping G. Downward sloping long-run supply curve H Perfectly competitive market in the long-run equilibrium given P zero economic profit A firm in perfect competition faces equilibrium Price- $5.50,AC Quantity - 200, Average Cost $7.50, and Average Variable Cost $6.50 J. Allocative efficiency K. No control over price at which the product is sold :Profit A constant cost industry Quantity changes at a constant rate M. Perfectly inelastic demand curve N A firm in perfectly competitive market must reduce price to sell more units (Law of Demand) 0 A firm in perfect competition will continue to produce

Explanation / Answer

1. Option K
A perfectly competitive firm has no control over price and hence it represents a firm in perfectly competitive market.

2. Option F
The market demand curve of a perfectly competitive industry is downward sloping.

3. Option E
If MC>MR then it is in firm's interest to reduce the output as it will cut down the losses.

4. Option O
A firm in perfectly competition will continue to produce since P>AVC.

5. Option H
The firm in perfectly competitive market will earn zero economic profit since P = AC in long run.

6. Option J
P - MC = 0 implies P = MC which is the condition for allocative efficiency.

7. Option A
The firm should shut down since P< AVC.

8. Option C
the formula for profit is (P-AC)*Q

9. Option L
the quantity of a constant cost industry changes at a constant rate.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.