Micro 4

Front 1

Suppose Thelma and Louise both sell fried green tomatoes in a competitive price-taker market. If louise increases her output,

Back 1

the price Thelma can charge is unaffected.

Front 2

Claude's Copper Clappers sell for $40 each in a competitive price taker market. At its present rate of output, Claude's marginal cost is $39, average varible cost is $25, and average total cost is $45. To improve his profit/loss situation, Claude should

Back 2

increase output

Front 3

The marginal revenue of a price taker is

Back 3

equal to price.

Front 4

If there is an increase in demand in a competitive price taker market, then in the short run

Back 4

profits will rise

Front 5

If a restaurant in a summer tourist area is highly profitable during the summer months but unable to cover even its variable costs during the winter months, the restaurant should

Back 5

shut down during the winter, but continue operating during the summer as long as the summer profits exceed the fixed costs during the winter shut down period.

Front 6

The supply curve of a price-taker firm in the short run is the

Back 6

portion of the firm's marginal cost curve that lies above the average variable cost curve.

Front 7

The short run supply curve in the price-taking industry is the

Back 7

horizontal summation of the individual firms' MC curves above AVC.

Front 8

A competitive price-taker firm would be willing to remain in the industry in the long run at zero economic profit because

Back 8

it is covering all costs, including the opportunity cost of capital and labor.

Front 9

When new firms have an incentive to enter a competitive price taker market, their entry will

Back 9

drive down profits of existing firms in the market.

Front 10

A perfectly elastic, long-run market supply curve is most likely to be achieved in a(n)

Back 10

constant cost industry.

Front 11

Suppose a typical firm in a particular industry is making positive economic profits. These economic profits

Back 11

signal owners of factors of production to move resources into this industry.