Review to Perfect Competition Test

Read Chapter 9.  Here is a down and dirty review:

1.       When is a firm in competitive, long-run equilibrium?

2.       Describe what will happen to the industry supply curve when a firm is making a profit? A loss?

3.       Understand and apply the profit maximizing rule (MR=MC)

4.       Know that the firm’s MC curve is the firm’s supply curve.

5.       Be able to calculate AFC when given ATC and AVC.

6.       Know the assumptions of a perfectly competitive market.

7.       Define and describe the long run supply curve.

8.       When given a graph of a firm’s MC, ATC, AVC, and MR curves, find profit maximization, shut-down price, and loss minimizing position.

9.       Be able to identify each of the curves in 8 above when given a graph.

10.   Define “marginal revenue”.

11.   What is a “price taker”?

12.   Explain why AR=MR=P for a perfect competitor.

13.   Interpret and apply the “Marginal Decision Rule”.

14.   Know that the MC intersects the AVC and ATC curve at the lowest points.

15.   Resource Allocative Efficiency is often called the “socially optimal output”.  In micro, what equation defines the Resource Allocative Efficient point?