Question 1

Which scenario is MOST likely to cause firms to exit a perfectly competitive industry?

Accepted Answer

A) Consumer tastes and preferences for this product get stronger,making them more interested in the good. 
B) A technological advance allows all firms to produce more efficiently. 
C) The price of a key variable input falls. 
D) Consumer income falls. 
A) Consumer tastes and preferences for this product get stronger,making them more interested in the good. 
B) A technological advance allows all firms to produce more efficiently. 
C) The price of a key variable input falls. 
D) Consumer income falls.

Question 2

If a firm in perfect competition sells 10 units of output at $5 per unit,its marginal revenue is:

Accepted Answer

A) $5. 
B) more than $5 but less than $50. 
C) $50. 
D) $250. 
A) $5. 
B) more than $5 but less than $50. 
C) $50. 
D) $250.

Question 3

Use the following to answer question:  
-(Figure: Game-Day Shirts)Use Figure: Game-Day Shirts.Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market.His costs are identical to the costs of the other 9 vendors.If the industry is in long-run equilibrium,the price of each shirt will be:

Accepted Answer

A) $6. 
B) $9. 
C) $11. 
D) $14. 
A) $6. 
B) $9. 
C) $11. 
D) $14.

Question 4

Use the following to answer question:  
-(Figure: Revenues,Costs,and Profits for Tomato Producers III)Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $14,in the short run the farmer's profit-maximizing output is _____ bushels.

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 5

Use the following to answer question:  
-(Figure: Costs and Profits for Tomato Producers)Use Figure: Costs and Profits for Tomato Producers.The market for tomatoes is perfectly competitive.The market price of a bushel of tomatoes is $18.If the market price falls to $16,the farmer's marginal revenue _____ and the profit-maximizing output _____.

Accepted Answer

A) increases;decreases 
B) increases;increases 
C) decreases;increases 
D) decreases;decreases 
A) increases;decreases 
B) increases;increases 
C) decreases;increases 
D) decreases;decreases

Question 6

In the short run,if P = ATC,a perfectly competitive firm:

Accepted Answer

A) produces output and earns zero economic profit. 
B) produces output and earns an economic profit. 
C) produces output and incurs an economic loss. 
D) does not produce output and incurs an economic loss. 
A) produces output and earns zero economic profit. 
B) produces output and earns an economic profit. 
C) produces output and incurs an economic loss. 
D) does not produce output and incurs an economic loss.

Question 7

If a perfectly competitive firm is producing a quantity where P = MC,then profit:

Accepted Answer

A) is maximized. 
B) can be increased by decreasing the quantity. 
C) can be increased by decreasing the price. 
D) can be increased by increasing production. 
A) is maximized. 
B) can be increased by decreasing the quantity. 
C) can be increased by decreasing the price. 
D) can be increased by increasing production.

Question 8

Use the following to answer question:  
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $3.50,the profit-maximizing output is _____ units.

Accepted Answer

A) 5 
B) 7 
C) 8 
D) 9 
A) 5 
B) 7 
C) 8 
D) 9

Question 9

Use the following to answer question:  
-(Figure: A Perfectly Competitive Firm in the Short Run)Use Figure: A Perfectly Competitive Firm in the Short Run.The firm's short-run supply curve is the:

Accepted Answer

A) entire MC curve. 
B) rising part of the MC curve beginning at point W. 
C) rising part of the MC curve beginning at the point at which the firm starts earning economic profit. 
D) MC curve below point P. 
A) entire MC curve. 
B) rising part of the MC curve beginning at point W. 
C) rising part of the MC curve beginning at the point at which the firm starts earning economic profit. 
D) MC curve below point P.

Question 10

For a firm in a perfectly competitive market,_____ revenue equals _____.

Accepted Answer

A) marginal;total revenue 
B) marginal;market price 
C) net;price 
D) net;marginal revenue 
A) marginal;total revenue 
B) marginal;market price 
C) net;price 
D) net;marginal revenue

Question 11

A firm's shut-down point is the minimum value of _____ cost.

Accepted Answer

A) total 
B) average variable 
C) average total 
D) marginal 
A) total 
B) average variable 
C) average total 
D) marginal

Question 12

Zoe's Bakery operates in a perfectly competitive industry.When the market price of iced cupcakes is $5,the profit-maximizing output level is 150 cupcakes.Her average total cost is $4,and her average variable cost is $3.Zoe's marginal cost is _____,and her short-run profits are _____.

Accepted Answer

A) $5;$150 
B) $5;$300 
C) $1;$150 
D) $1;$300 
A) $5;$150 
B) $5;$300 
C) $1;$150 
D) $1;$300

Question 13

When perfect competition prevails,which characteristic of firms are we likely to observe?

Accepted Answer

A) They erect and maintain barriers to new firms. 
B) There are not many of them. 
C) They all try to highlight the substantial product differentiation between producers. 
D) They are all price takers. 
A) They erect and maintain barriers to new firms. 
B) There are not many of them. 
C) They all try to highlight the substantial product differentiation between producers. 
D) They are all price takers.

Question 14

When a perfectly competitive firm is in long-run equilibrium,the firm is producing at _____ cost.

Accepted Answer

A) maximum average total 
B) maximum average variable 
C) minimum marginal 
D) minimum average total 
A) maximum average total 
B) maximum average variable 
C) minimum marginal 
D) minimum average total

Question 15

Lawn mowing is a perfectly competitive industry.Alex's Lawn-Mowing Service should close if Alex expects his long-run economic profits to equal zero.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer question:  
-(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The firm faces demand curve d and maximizes profit.In a long-run equilibrium,this firm will produce _____ units of output and sell its output for _____.

Accepted Answer

A) 100;$1.00 
B) 250;$1.90 
C) 300;$2.00 
D) 400;$3.00 
A) 100;$1.00 
B) 250;$1.90 
C) 300;$2.00 
D) 400;$3.00

Question 17

Use the following to answer question:  
-(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit.The firm's economic profit in the long run will be:

Accepted Answer

A) $0. 
B) $250. 
C) $275. 
D) $300. 
A) $0. 
B) $250. 
C) $275. 
D) $300.

Question 18

Use the following to answer question:  
-(Figure: Marginal Decision Rule)Use Figure: The Marginal Decision Rule.Economic profit:

Accepted Answer

A) is earned only for quantities between q1 and q2. 
B) is earned only for quantities between the origin and q1. 
C) is maximized at q1. 
D) cannot be determined from the information provided. 
A) is earned only for quantities between q1 and q2. 
B) is earned only for quantities between the origin and q1. 
C) is maximized at q1. 
D) cannot be determined from the information provided.

Question 19

Suppose the beef industry is perfectly competitive and the demand for beef rises.As long as the demand does not subsequently fall,beef producers can expect to earn economic profits in both the short run and the long run.

Accepted Answer

A) True 
 B)False

Question 20

In long-run equilibrium in a perfectly competitive market,all firms will be operating at their lowest possible average total cost.

Accepted Answer

A) True 
 B)False

Which scenario is MOST likely to cause firms to exit a perfectly competitive industry?

If a firm in perfect competition sells 10 units of output at $5 per unit,its marginal revenue is:

In the short run,if P = ATC,a perfectly competitive firm:

If a perfectly competitive firm is producing a quantity where P = MC,then profit:

Use the following to answer question: -(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $3.50,the profit-maximizing output is _____ units.

Use the following to answer question: -(Figure: A Perfectly Competitive Firm in the Short Run)Use Figure: A Perfectly Competitive Firm in the Short Run.The firm's short-run supply curve is the:

For a firm in a perfectly competitive market,_ revenue equals _.

A firm's shut-down point is the minimum value of _____ cost.

Zoe's Bakery operates in a perfectly competitive industry.When the market price of iced cupcakes is $5,the profit-maximizing output level is 150 cupcakes.Her average total cost is $4,and her average variable cost is $3.Zoe's marginal cost is _,and her short-run profits are _.

When perfect competition prevails,which characteristic of firms are we likely to observe?

When a perfectly competitive firm is in long-run equilibrium,the firm is producing at _____ cost.

Lawn mowing is a perfectly competitive industry.Alex's Lawn-Mowing Service should close if Alex expects his long-run economic profits to equal zero.

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The firm faces demand curve d and maximizes profit.In a long-run equilibrium,this firm will produce _ units of output and sell its output for _.

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit.The firm's economic profit in the long run will be:

Use the following to answer question: -(Figure: Marginal Decision Rule)Use Figure: The Marginal Decision Rule.Economic profit:

Suppose the beef industry is perfectly competitive and the demand for beef rises.As long as the demand does not subsequently fall,beef producers can expect to earn economic profits in both the short run and the long run.

In long-run equilibrium in a perfectly competitive market,all firms will be operating at their lowest possible average total cost.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 12: Perfect Competition and the Supply Curve

Which scenario is MOST likely to cause firms to exit a perfectly competitive industry?

If a firm in perfect competition sells 10 units of output at $5 per unit,its marginal revenue is:

In the short run,if P = ATC,a perfectly competitive firm:

If a perfectly competitive firm is producing a quantity where P = MC,then profit:

Use the following to answer question: -(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $3.50,the profit-maximizing output is _____ units.

Use the following to answer question: -(Figure: A Perfectly Competitive Firm in the Short Run)Use Figure: A Perfectly Competitive Firm in the Short Run.The firm's short-run supply curve is the:

For a firm in a perfectly competitive market,_____ revenue equals _____.

A firm's shut-down point is the minimum value of _____ cost.

Zoe's Bakery operates in a perfectly competitive industry.When the market price of iced cupcakes is $5,the profit-maximizing output level is 150 cupcakes.Her average total cost is $4,and her average variable cost is $3.Zoe's marginal cost is _____,and her short-run profits are _____.

When perfect competition prevails,which characteristic of firms are we likely to observe?

When a perfectly competitive firm is in long-run equilibrium,the firm is producing at _____ cost.

Lawn mowing is a perfectly competitive industry.Alex's Lawn-Mowing Service should close if Alex expects his long-run economic profits to equal zero.

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The firm faces demand curve d and maximizes profit.In a long-run equilibrium,this firm will produce _____ units of output and sell its output for _____.

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit.The firm's economic profit in the long run will be:

Use the following to answer question: -(Figure: Marginal Decision Rule)Use Figure: The Marginal Decision Rule.Economic profit:

Suppose the beef industry is perfectly competitive and the demand for beef rises.As long as the demand does not subsequently fall,beef producers can expect to earn economic profits in both the short run and the long run.

In long-run equilibrium in a perfectly competitive market,all firms will be operating at their lowest possible average total cost.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

For a firm in a perfectly competitive market,_ revenue equals _.

Zoe's Bakery operates in a perfectly competitive industry.When the market price of iced cupcakes is $5,the profit-maximizing output level is 150 cupcakes.Her average total cost is $4,and her average variable cost is $3.Zoe's marginal cost is _,and her short-run profits are _.

Use the following to answer question: -(Figure: The Perfectly Competitive Firm)Use Figure: The Perfectly Competitive Firm.The firm faces demand curve d and maximizes profit.In a long-run equilibrium,this firm will produce _ units of output and sell its output for _.