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Exam 22: The Competitive Firm

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Question 21

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In defining economic costs,economists emphasize

A) Explicit and implicit costs while accountants recognize only implicit costs.
B) Explicit and implicit costs while accountants recognize only explicit costs.
C) Only explicit costs while accountants recognize only implicit costs.
D) Only explicit costs while accountants recognize explicit and implicit costs.

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Question 22

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When technology improves,the firm's marginal cost curve shifts

A) Upward,and supply increases.
B) Downward,and supply increases.
C) Upward,and supply decreases.
D) Downward,and supply decreases.

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Question 23

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If the equilibrium price in a perfectly competitive market for walnuts is $4.99 per pound,then an individual firm in this market can

If a business owner uses a warehouse he owns to store his inventory,then his total costs will be less than if he rented warehouse space from someone else.

The decision to enter or exit an industry is known as the

Which of the following does not affect marginal costs?

For perfectly competitive firms,marginal revenue always equals price.

Suppose a firm has an annual budget of $200,000 in wages and salaries,$75,000 in materials,$30,000 in new equipment,$20,000 in rented property,and $35,000 in interest costs on capital.The owner/manager does not choose to pay himself,but he could receive income of $90,000 by working elsewhere.The firm earns revenues of $360,000 per year.What are the annual implicit costs for the firm described above?

Table 22.1 $\begin{array}{l} \text { Assume an apple farmer incurs the following costs and revenues }\\\begin{array} {| l | r| } \hline \text { Fertilizer } & \$ 200 \\\hline \text { Seeds } & \$ 75 \\\hline \text { Water } & \$ 250 \\\hline \text { Wages } & \$ 750 \\\hline \text { Property taxes } & \$ 600 \\\hline \text { Interest payments on borrowed funds } & \$ 1,200 \\\hline \text { Bales of apples } & \$ 4,000 \\\hline\end{array}\end{array}$ The accounting profit is equal to

If a perfectly competitive firm wanted to maximize its total revenues,it would produce

The shutdown point occurs where price is below the minimum of

In the short run,a firm will maximize profits if it increases output when marginal revenue is greater than marginal cost.

A change in which of the following will change the optimal rate of output?

Marginal revenue is the change in

What serves as the supply curve for a perfectly competitive firm? Why is this supply curve upward-sloping,or why does it take a higher price to get a firm to produce and sell more output?

Explain why a perfectly competitive firm has no incentive to charge a higher or lower price than the market price.

Explain why a firm maximizes its total profits by producing where MC = MR.To answer this question completely,you should explain why output levels greater than and less than the level where MC = MR do not maximize profits.

The best measure of the economic cost of doing your homework is

Businesses that fail to account for implicit costs,like the strawberry farmer,Hiroshi Fujishige,who failed to consider the enormous opportunity of selling his property to Disneyland,will

For perfectly competitive firms,price