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The market for olive oil is perfectly competitive and is in equilibrium. On the…

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Wize University Microeconomics Textbook > Firms in Competitive Markets (Perfect Competition)

Profit Maximization

3 Activities

The market for olive oil is perfectly competitive and is in equilibrium. On the news, Dr. Simpson says "Olive oil has been found to be associated with high risk for cardiovascular disease according to our studies.”

Which of the following will likely occur as result of the news?

i) the quantity demanded for olive oil will decrease
ii) the demand for olive oil will decrease
iii) in the long run, some firms will exit the industry
iv) there will be some deadweight loss
More Profit Maximization Questions:
Practice Question: Perfect Competition
The graph below shows the cost curves for a producer in a perfectly competitive market.
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b) Should the producer keep producing or shut down?
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Practice: Perfect Competition /Short run
The diagram below shows the cost and marginal revenue curves for a perfectly competitive company.
Practice: Perfect Competition
Competition in the Short Run vs. Long Run
Practice: Short-run (2)
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Total revenue (TR) for an individual firm in a perfectly competitive market equals.
Practice: Perfect Competition
A perfectly competitive market is characterized by
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Practice: Perfect Competition
The graph below shows the cost curves for a producer in a perfectly competitive market.
Suppose that the market for growing avocados is perfectly competitive. The price charged by producers is $2 per avocado and the marginal cost is $1.25.
Practice: Short-run (1)
If the perfectly competitive market price is P1 the firm above