Micro Unit 3.2-7: Price and Output Determination-Perfect Competition (MS)

In attempting to maximize profits a firm will always produce at that output where total revenues are at a maximum.

In the short-run a competitive firm will always choose to shut down if product price is less than the lowest attainable total cost.

After all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average cost is at a minimum.

The long-run supply curve for a decreasing-cost industry is downsloping.

A competitive firm will produce in the short run so long as its total revenues are sufficient to cover its total fixed cost.

Marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product.

Price and marginal revenue are identical for an individually purely competitive seller.

The fact that the equilibrium position of a purely competitive seller entails an equality of price and marginal costs suggests that competition is conducive to an efficient allocation of economic resources.

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

The demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are down-sloping.

The total revenue curve of a competitive seller graphs as a straight, upsloping line.

Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output.

In a purely competitive industry competition centers upon advertising and sales promotion than it does upon price.

Individual purely competitive firms can influence the price of their product.