Question 1

For a perfectly competitive firm in the short run,if the firm produces the quantity at which _____,the firm _____.

Accepted Answer

A) P > ATC;is profitable B) P < ATC;breaks even C) P = ATC;incurs a loss D) P < ATC;is profitable A) P > ATC;is profitable B) P < ATC;breaks even C) P = ATC;incurs a loss D) P < ATC;is profitable

Question 2

The assumptions of perfect competition imply that:

Accepted Answer

A) individuals in the market accept the market price as given. 
B) individuals can influence the market price. 
C) the price will be fair. 
D) the price will be high. 
A) individuals in the market accept the market price as given. 
B) individuals can influence the market price. 
C) the price will be fair. 
D) the price will be high.

Question 3

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

Accepted Answer

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

Question 4

Use the following to answer question:  
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:

Accepted Answer

A) $2.00. 
B) $2.50. 
C) $3.50. 
D) $4.50. 
A) $2.00. 
B) $2.50. 
C) $3.50. 
D) $4.50.

Question 5

Perfect competition is a model of the market that does NOT assume:

Accepted Answer

A) a large number of firms. 
B) firms facing downward-sloping demand curves. 
C) firms producing identical goods. 
D) many buyers. 
A) a large number of firms. 
B) firms facing downward-sloping demand curves. 
C) firms producing identical goods. 
D) many buyers.

Question 6

In the short run,a perfectly competitive firm produces output and breaks even if the firm produces the quantity at which:

Accepted Answer

A) P  ATC. 
D) P = (TR/Q + TC/Q)× Q. 
A) P  ATC. 
D) P = (TR/Q + TC/Q)× Q.

Question 7

If all firms in an industry are price takers:

Accepted Answer

A) each firm can sell at the price it wants to charge,provided it is not too different from the prices other firms are charging. 
B) each firm takes the market price as given for its output level,recognizing that the price will change if it alters its output significantly. 
C) an individual firm cannot alter the market price even if it doubles its output. 
D) the market sets the price,and each firm can take it or leave it by setting a different price. 
A) each firm can sell at the price it wants to charge,provided it is not too different from the prices other firms are charging. 
B) each firm takes the market price as given for its output level,recognizing that the price will change if it alters its output significantly. 
C) an individual firm cannot alter the market price even if it doubles its output. 
D) the market sets the price,and each firm can take it or leave it by setting a different price.

Question 8

A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

Accepted Answer

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

Question 9

For a firm producing at any level of output LOWER than the most profitable one,an increase in output adds:

Accepted Answer

A) more to total cost than to total revenue. 
B) more to total revenue than to total cost. 
C) the same amount to total revenue as to total cost. 
D) to total revenue but not to total cost. 
A) more to total cost than to total revenue. 
B) more to total revenue than to total cost. 
C) the same amount to total revenue as to total cost. 
D) to total revenue but not to total cost.

Question 10

A perfectly competitive firm's short-run supply curve is its _____ cost curve above its intersection with the firm's _____ cost curve.

Accepted Answer

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

Question 11

Use the following to answer question:  
-(Table: Variable Costs for Lawns)Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between).His only fixed cost is $1,000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $60,how many lawns will Alex mow?

Accepted Answer

A) 0 
B) 20 
C) 50 
D) 40 
A) 0 
B) 20 
C) 50 
D) 40

Question 12

If a perfectly competitive firm sells 300 units of output at $1 per unit,its marginal revenue is:

Accepted Answer

A) less than $1. 
B) $1. 
C) more than $1 but less than $300. 
D) $300. 
A) less than $1. 
B) $1. 
C) more than $1 but less than $300. 
D) $300.

Question 13

Use the following to answer question:  
-(Table: Variable Costs for Lawns)Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between).His only fixed cost is $1,000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $40,how much is Alex's total cost at the profit-maximizing output?

Accepted Answer

A) $1,000 
B) $1,200 
C) $500 
D) $1,500 
A) $1,000 
B) $1,200 
C) $500 
D) $1,500

Question 14

Suppose that some firms in a perfectly competitive industry earn negative economic profits in the short run.In the long run,the:

Accepted Answer

A) short-run industry supply curve will not shift. 
B) short-run industry supply curve will shift to the left. 
C) number of firms in the industry will not change. 
D) number of firms in the industry will increase. 
A) short-run industry supply curve will not shift. 
B) short-run industry supply curve will shift to the left. 
C) number of firms in the industry will not change. 
D) number of firms in the industry will increase.

Question 15

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the market price will _____ and the output of a typical firm will _____.

Accepted Answer

A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall 
A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall

Question 16

A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum.If ATC = $8 and MR = $9,to maximize profits (or minimize losses),this firm should:

Accepted Answer

A) increase output. 
B) reduce output. 
C) increase price. 
D) do nothing;because it is already maximizing profits. 
A) increase output. 
B) reduce output. 
C) increase price. 
D) do nothing;because it is already maximizing profits.

Question 17

In a perfectly competitive market,tastes and preferences lead to an increase in the demand for the good.Holding everything else constant,this will lead to an increase in price that will result in _____ in the short run,which will in turn _____,which will _____.

Accepted Answer

A) positive economic profits;attract new firms;reduce the price 
B) economic losses;attract new firms;reduce the price 
C) positive economic profits;lead some firms to leave the industry;further increase the price 
D) economic losses;lead some firms to leave the industry;further increase the price 
A) positive economic profits;attract new firms;reduce the price 
B) economic losses;attract new firms;reduce the price 
C) positive economic profits;lead some firms to leave the industry;further increase the price 
D) economic losses;lead some firms to leave the industry;further increase the price

Question 18

Use the following to answer question:  
-(Table: Cherry Farm)Use Table: Cherry Farm.Suppose there are 100 farms in this industry with identical cost curves,as shown in the table.Which point would fall on the industry short-run supply curve?

Accepted Answer

A) $5,100 pounds 
B) $4,200 pounds 
C) $4,400 pounds 
D) $2,500 pounds 
A) $5,100 pounds 
B) $4,200 pounds 
C) $4,400 pounds 
D) $2,500 pounds

Question 19

During the summer,Alex runs a mowing service,and lawn mowing is a perfectly competitive industry.In the short run,Alex will shut down if the:

Accepted Answer

A) total revenues can't cover fixed costs. 
B) total revenues can't cover variable costs. 
C) total revenues can't cover total costs. 
D) price exceeds the average total cost. 
A) total revenues can't cover fixed costs. 
B) total revenues can't cover variable costs. 
C) total revenues can't cover total costs. 
D) price exceeds the average total cost.

Question 20

A perfectly competitive firm will maximize profits when the:

Accepted Answer

A) marginal revenue equals marginal cost. 
B) marginal revenue is lower than average variable cost. 
C) price is lower than marginal cost. 
D) price is higher than marginal cost. 
A) marginal revenue equals marginal cost. 
B) marginal revenue is lower than average variable cost. 
C) price is lower than marginal cost. 
D) price is higher than marginal cost.

For a perfectly competitive firm in the short run,if the firm produces the quantity at which _,the firm _.

The assumptions of perfect competition imply that:

If a perfectly competitive firm is producing a quantity where MC = MR,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.In the short run,the firm will produce,but at a loss,if the price is:

Perfect competition is a model of the market that does NOT assume:

In the short run,a perfectly competitive firm produces output and breaks even if the firm produces the quantity at which:

If all firms in an industry are price takers:

A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

For a firm producing at any level of output LOWER than the most profitable one,an increase in output adds:

A perfectly competitive firm's short-run supply curve is its _ cost curve above its intersection with the firm's _ cost curve.

If a perfectly competitive firm sells 300 units of output at $1 per unit,its marginal revenue is:

Suppose that some firms in a perfectly competitive industry earn negative economic profits in the short run.In the long run,the:

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the market price will _ and the output of a typical firm will _.

A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum.If ATC = $8 and MR = $9,to maximize profits (or minimize losses),this firm should:

In a perfectly competitive market,tastes and preferences lead to an increase in the demand for the good.Holding everything else constant,this will lead to an increase in price that will result in ___ in the short run,which will in turn _,which will ___.

Use the following to answer question: -(Table: Cherry Farm)Use Table: Cherry Farm.Suppose there are 100 farms in this industry with identical cost curves,as shown in the table.Which point would fall on the industry short-run supply curve?

During the summer,Alex runs a mowing service,and lawn mowing is a perfectly competitive industry.In the short run,Alex will shut down if the:

A perfectly competitive firm will maximize profits when the:

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

For a perfectly competitive firm in the short run,if the firm produces the quantity at which _____,the firm _____.

The assumptions of perfect competition imply that:

If a perfectly competitive firm is producing a quantity where MC = MR,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.In the short run,the firm will produce,but at a loss,if the price is:

Perfect competition is a model of the market that does NOT assume:

In the short run,a perfectly competitive firm produces output and breaks even if the firm produces the quantity at which:

If all firms in an industry are price takers:

A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

For a firm producing at any level of output LOWER than the most profitable one,an increase in output adds:

A perfectly competitive firm's short-run supply curve is its _____ cost curve above its intersection with the firm's _____ cost curve.

If a perfectly competitive firm sells 300 units of output at $1 per unit,its marginal revenue is:

Suppose that some firms in a perfectly competitive industry earn negative economic profits in the short run.In the long run,the:

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the market price will _____ and the output of a typical firm will _____.

A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum.If ATC = $8 and MR = $9,to maximize profits (or minimize losses),this firm should:

In a perfectly competitive market,tastes and preferences lead to an increase in the demand for the good.Holding everything else constant,this will lead to an increase in price that will result in _____ in the short run,which will in turn _____,which will _____.

Use the following to answer question: -(Table: Cherry Farm)Use Table: Cherry Farm.Suppose there are 100 farms in this industry with identical cost curves,as shown in the table.Which point would fall on the industry short-run supply curve?

During the summer,Alex runs a mowing service,and lawn mowing is a perfectly competitive industry.In the short run,Alex will shut down if the:

A perfectly competitive firm will maximize profits when the:

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 perfectly competitive firm in the short run,if the firm produces the quantity at which _,the firm _.

A perfectly competitive firm's short-run supply curve is its _ cost curve above its intersection with the firm's _ cost curve.

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the market price will _ and the output of a typical firm will _.

In a perfectly competitive market,tastes and preferences lead to an increase in the demand for the good.Holding everything else constant,this will lead to an increase in price that will result in ___ in the short run,which will in turn _,which will ___.