Self-Check Questions

1. Firms in a perfectly competitive market are said to be “price takers”—that is, once the market determines

an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly

competitive market, but you are not happy with its price, would you raise the price, even by a cent?

2. Would independent trucking fit the characteristics of a perfectly competitive industry?

3. Look at Table 8.13. What would happen to the firm’s profits if the market price increases to $6 per pack of

raspberries?

Quantity Total Cost Fixed Cost Variable Cost Total Revenue Profit

0

10

20

30

40

50

60

70

80

90

$62

$90

$110

$126

$144

$166

$192

$224

$264

$324

100

$404

TABLE 8.13

$62

$62

$62

$62

$62

$62

$62

$62

$62

$62

$62

-

$28

$48

$64

$82

$104

$130

$162

$202

$262

$342

$0

$60

$120

$180

$240

$300

$360

$420

$480

$540

$600

−$62

−$30

$10

$54

$96

$134

$168

$196

$216

$216

$196
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