Title: Micro Econ Ch. 8 Flashcards - Questions and Answers | Quizlet
Headings: Micro Econ Ch. 8
Micro Econ Ch. 8
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Terms in this set (15)
THIS SET IS OFTEN IN FOLDERS WITH...
Micro Econ Ch. 6
Micro Econ Ch. 7
Chapter 23: Pure Competition

Content: Its marginal revenue is less than average revenue
Marginal cost equals average variable cost
It is making economic profits in the long run
It produces at the minimum average total cost
D
If a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following applies, except: Other firms will want to enter the industry because of the positive economic profits
The firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale. The firm may be earning some accounting profits, but less than what it could earn elsewhere
The firm is suffering losses, and if things are not expected to improve, the firm will leave the industry
A
The market for agricultural products such as wheat or corn would best be described by which market model? Pure monopoly
Oligopoly
Pure competition
Monopolistic competition
C
If the demand curve faced by an individual firm is downward-sloping, the firm cannot be a: A purely competitive firm
A monopoly firm
An oligopolistic firm
A monopolistically competitive firm
A
The representative firm in a purely competitive industry: Will always earn an economic profit in the long run
Will always earn a profit in the short run
Will earn zero economic profit in the long run
May earn either an economic profit or a loss in the long run
C
Creative destruction is most often associated with: Technological advance
Government spending
Private consumption
International trade
A
In pure competition, if the market price of the product is initially higher than the minimum average cost of the firms, then: Other firms will enter the industry and the industry supply will decrease
Other firms will enter the industry and the industry supply will increase
Some firms will exit the industry and the industry supply will decrease
Some firms will exit the industry and the industry supply will increase
B
In a purely competitive industry, each firm: Determines its own price
Engages in various forms of nonprice competition
Can easily enter or exit the industry
Produces a differentiated product
C
In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is: Greater than the price
Equal to the price
Equal to the average cost
Less than the price
B
In which market model are the conditions of entry into the market easiest?