Question 1

If a firm is producing at an output where the total revenue curve crosses the total cost curve,

Accepted Answer

A) revenue is maximized 
B) cost is maximized 
C) cost is minimized 
D) profit is maximized 
E) profit is zero 
A) revenue is maximized 
B) cost is maximized 
C) cost is minimized 
D) profit is maximized 
E) profit is zero

Question 2

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market   Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P1 represents the equilibrium market price.What is the profit-maximizing quantity for the firm?

Accepted Answer

A) Q1 bushels 
B) Q2 bushels 
C) Q3 bushels 
D) Q4 bushels 
E) Q5 bushels 
A) Q1 bushels 
B) Q2 bushels 
C) Q3 bushels 
D) Q4 bushels 
E) Q5 bushels

Question 3

A perfectly competitive firm is a price taker.Therefore, it faces a

Accepted Answer

A) perfectly elastic supply curve for its output 
B) perfectly elastic demand curve for its output 
C) perfectly inelastic supply curve for its output 
D) perfectly inelastic demand curve for its output 
E) unit-elastic demand curve for its output 
A) perfectly elastic supply curve for its output 
B) perfectly elastic demand curve for its output 
C) perfectly inelastic supply curve for its output 
D) perfectly inelastic demand curve for its output 
E) unit-elastic demand curve for its output

Question 4

If two perfectly competitive firms produce the same quantity at the market price, then, at that quantity, they must have the same

Accepted Answer

A) marginal cost and average total cost 
B) marginal cost and average fixed cost 
C) average total cost and average fixed cost 
D) average fixed cost and average variable cost 
E) marginal cost 
A) marginal cost and average total cost 
B) marginal cost and average fixed cost 
C) average total cost and average fixed cost 
D) average fixed cost and average variable cost 
E) marginal cost

Question 5

The demand curve facing a perfectly competitive firm is

Accepted Answer

A) perfectly elastic 
B) perfectly inelastic 
C) unit elastic 
D) downward-sloping 
E) identical to the industry demand curve 
A) perfectly elastic 
B) perfectly inelastic 
C) unit elastic 
D) downward-sloping 
E) identical to the industry demand curve

Question 6

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market   Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P3 represents the equilibrium market price.What is the profit-maximizing quantity for the firm?

Accepted Answer

A) Q1 bushels 
B) Q2 bushels 
C) Q3 bushels 
D) Q4 bushels 
E) Q5 bushels 
A) Q1 bushels 
B) Q2 bushels 
C) Q3 bushels 
D) Q4 bushels 
E) Q5 bushels

Question 7

When market exchange occurs voluntarily in a competitive market

Accepted Answer

A) choice incurs no opportunity cost 
B) the sum of consumer surplus and producer surplus is maximized 
C) both consumer surplus and producer surplus are eliminated 
D) buyers benefit at the expense of producers 
E) the exchange confers no net benefit to the participants 
A) choice incurs no opportunity cost 
B) the sum of consumer surplus and producer surplus is maximized 
C) both consumer surplus and producer surplus are eliminated 
D) buyers benefit at the expense of producers 
E) the exchange confers no net benefit to the participants

Question 8

Which of the following firms is most likely to be a perfectly competitive firm?

Accepted Answer

A) one of the three largest U.S.automakers 
B) one of the "Seven Sisters" oil producers 
C) a public school operated by the government 
D) a soybean farmer 
E) a manufacturer of refrigerators 
A) one of the three largest U.S.automakers 
B) one of the "Seven Sisters" oil producers 
C) a public school operated by the government 
D) a soybean farmer 
E) a manufacturer of refrigerators

Question 9

Perfectly competitive firms that earn an economic profit in the short run choose the output that

Accepted Answer

A) maximizes total revenue 
B) minimizes total cost 
C) maximizes the difference between total revenue and total cost 
D) maximizes the difference between total revenue and explicit cost 
E) maximizes the difference between total revenue and implicit cost 
A) maximizes total revenue 
B) minimizes total cost 
C) maximizes the difference between total revenue and total cost 
D) maximizes the difference between total revenue and explicit cost 
E) maximizes the difference between total revenue and implicit cost

Question 10

It is possible for a firm to enjoy a short-run producer surplus, while at the same time suffering a short-run economic loss

Accepted Answer

A) True 
 B)False

Question 11

A perfectly competitive firm producing 100 units of output per period finds that: Average total cost is $20;
Average variable cost is $12;
Marginal cost is $18 and increasing;
Price of the product is $15.
This firm should

Accepted Answer

A) produce more output 
B) raise the price of its product 
C) reduce production without shutting down 
D) shut down (reduce output to zero) 
E) do nothing (it is currently maximizing profit) 
A) produce more output 
B) raise the price of its product 
C) reduce production without shutting down 
D) shut down (reduce output to zero) 
E) do nothing (it is currently maximizing profit)

Question 12

If a perfectly competitive firm raises its price, its sales decrease to zero.

Accepted Answer

A) True 
 B)False

Question 13

Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases.What happens to the industry in the long run?

Accepted Answer

A) It experiences no change from the original equilibrium 
B) It experiences a higher equilibrium price and produces less output 
C) It experiences a lower equilibrium price and produces less output 
D) It experiences the same equilibrium price but produces more output 
E) It experiences the same equilibrium price but produces less output 
A) It experiences no change from the original equilibrium 
B) It experiences a higher equilibrium price and produces less output 
C) It experiences a lower equilibrium price and produces less output 
D) It experiences the same equilibrium price but produces more output 
E) It experiences the same equilibrium price but produces less output

Question 14

Exhibit 8-6   Consider Exhibit 8-6.At which quantity will this firm maximize profit?

Accepted Answer

A) point a 
B) point b 
C) point c 
D) point d 
E) point e 
A) point a 
B) point b 
C) point c 
D) point d 
E) point e

Question 15

If a manufacturer shuts down in the short run, it must be true that before the shutdown, at all positive output levels,

Accepted Answer

A) average total cost was less than average variable cost 
B) fixed cost was greater than total revenue 
C) variable cost was greater than total revenue 
D) profit was zero 
E) total cost plus total revenue was less than profit 
A) average total cost was less than average variable cost 
B) fixed cost was greater than total revenue 
C) variable cost was greater than total revenue 
D) profit was zero 
E) total cost plus total revenue was less than profit

Question 16

Which of the following would not help identify market structure?

Accepted Answer

A) number of firms in the industry 
B) type of product produced in the industry 
C) ease of entry into the industry 
D) forms of competition among firms in the industry 
E) price of the good 
A) number of firms in the industry 
B) type of product produced in the industry 
C) ease of entry into the industry 
D) forms of competition among firms in the industry 
E) price of the good

Question 17

Firms achieve productive efficiency in the long run by

Accepted Answer

A) striving to minimize fixed cost 
B) striving to maximize revenue 
C) producing at their minimum long-run average cost 
D) producing at their minimum long-run marginal cost 
E) producing the output consumers want most 
A) striving to minimize fixed cost 
B) striving to maximize revenue 
C) producing at their minimum long-run average cost 
D) producing at their minimum long-run marginal cost 
E) producing the output consumers want most

Question 18

If a perfectly competitive firm is operating in long-run equilibrium and market demand suddenly falls, the short-run result will be

Accepted Answer

A) greater economic profit 
B) a normal profit 
C) lower average total cost 
D) lower average variable cost 
E) an economic loss 
A) greater economic profit 
B) a normal profit 
C) lower average total cost 
D) lower average variable cost 
E) an economic loss

Question 19

The slope of the total revenue curve for a perfectly competitive firm equals

Accepted Answer

A) marginal revenue, which is less than price 
B) marginal revenue, which is greater than price 
C) marginal revenue, which is equal to price 
D) average revenue, which is less than price 
E) average revenue, which is greater than price 
A) marginal revenue, which is less than price 
B) marginal revenue, which is greater than price 
C) marginal revenue, which is equal to price 
D) average revenue, which is less than price 
E) average revenue, which is greater than price

Question 20

Exhibit 8-18   The movement along curve S from E to E' in the right panel of Exhibit 8-18 represents

Accepted Answer

A) an increase in the number of firms in the industry only 
B) an increase in output by each of a fixed number of firms in the industry 
C) both an increase in the number of firms in the industry and an increase in each firm's output 
D) the response of consumers to an increase in supply that lowers the market price 
E) an increase in total revenue from $8 to $12 
A) an increase in the number of firms in the industry only 
B) an increase in output by each of a fixed number of firms in the industry 
C) both an increase in the number of firms in the industry and an increase in each firm's output 
D) the response of consumers to an increase in supply that lowers the market price 
E) an increase in total revenue from $8 to $12

Exam 8: A--Perfect Competition

If a firm is producing at an output where the total revenue curve crosses the total cost curve,

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P1 represents the equilibrium market price.What is the profit-maximizing quantity for the firm?

A perfectly competitive firm is a price taker.Therefore, it faces a

If two perfectly competitive firms produce the same quantity at the market price, then, at that quantity, they must have the same

The demand curve facing a perfectly competitive firm is

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P3 represents the equilibrium market price.What is the profit-maximizing quantity for the firm?

When market exchange occurs voluntarily in a competitive market

Which of the following firms is most likely to be a perfectly competitive firm?

Perfectly competitive firms that earn an economic profit in the short run choose the output that

It is possible for a firm to enjoy a short-run producer surplus, while at the same time suffering a short-run economic loss

A perfectly competitive firm producing 100 units of output per period finds that: Average total cost is $20; Average variable cost is $12; Marginal cost is $18 and increasing; Price of the product is $15. This firm should

If a perfectly competitive firm raises its price, its sales decrease to zero.

Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases.What happens to the industry in the long run?

Exhibit 8-6 Consider Exhibit 8-6.At which quantity will this firm maximize profit?

If a manufacturer shuts down in the short run, it must be true that before the shutdown, at all positive output levels,

Which of the following would not help identify market structure?

Firms achieve productive efficiency in the long run by

If a perfectly competitive firm is operating in long-run equilibrium and market demand suddenly falls, the short-run result will be

The slope of the total revenue curve for a perfectly competitive firm equals

Exhibit 8-18 The movement along curve S from E to E' in the right panel of Exhibit 8-18 represents

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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Exhibit 8-19 A Single Firm in a Perfectly Competitive Market Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P₁represents the equilibrium market price.What is the profit-maximizing quantity for the firm?

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm.If P₃represents the equilibrium market price.What is the profit-maximizing quantity for the firm?