Question 1

If a perfectly competitive firm sells 10 units of output at $30 per unit,its marginal revenue is:

Accepted Answer

A) $10. 
B) $30. 
C) more than $30. 
D) $300. 
A) $10. 
B) $30. 
C) more than $30. 
D) $300.

Question 2

In the short run,for a perfectly competitive firm,the portion of the MC curve at or above the shut-down price is also its:

Accepted Answer

A) individual short-run supply curve. 
B) ATC curve. 
C) AVC curve. 
D) individual demand curve. 
A) individual short-run supply curve. 
B) ATC curve. 
C) AVC curve. 
D) individual demand curve.

Question 3

Use the following to answer question:  
-(Table: Cherry Farm)Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

Accepted Answer

A) 600 pounds 
B) 500 pounds 
C) 400 pounds 
D) 0 pounds 
A) 600 pounds 
B) 500 pounds 
C) 400 pounds 
D) 0 pounds

Question 4

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 many lawns will Alex mow?

Accepted Answer

A) 0 
B) 20 
C) 30 
D) 40 
A) 0 
B) 20 
C) 30 
D) 40

Question 5

According to the optimal output rule,profits are maximized when firms produce where the difference between marginal revenue and marginal cost is the largest.

Accepted Answer

A) True 
 B)False

Question 6

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 price of a shirt is $6,the short-run industry supply will be _____ shirts.

Accepted Answer

A) 0 
B) 140 
C) 220 
D) 240 
A) 0 
B) 140 
C) 220 
D) 240

Question 7

Use the following to answer question:  
-(Table: Soybean Cost)Use Table: Soybean Cost.If the market price of a bushel of soybeans is $15,what will be the farmer's short-run profit at the optimal level of production?

Accepted Answer

A) $75 
B) $69 
C) $6 
D) $5 
A) $75 
B) $69 
C) $6 
D) $5

Question 8

Bob runs a pedicure business in a perfectly competitive industry.He knows that he will break even if the price of pedicures is $15 but that he will have to shut down if the price is $11 or lower.If the market demand in the industry is P = 30 - (0.2)Q and the market supply is P = (0.2)Q,in the short run,Bob will:

Accepted Answer

A) shut down since he cannot cover any of his variable costs. 
B) produce but make zero economic profit. 
C) produce with a loss since he is operating below his break-even level. 
D) shut down,although he is making a positive economic profit. 
A) shut down since he cannot cover any of his variable costs. 
B) produce but make zero economic profit. 
C) produce with a loss since he is operating below his break-even level. 
D) shut down,although he is making a positive economic profit.

Question 9

In the short run,a perfectly competitive firm produces output and incurs an economic loss if:

Accepted Answer

A) P > ATC. B) P P > ATC. D) AVC < P < ATC. A) P > ATC. B) P P > ATC. D) AVC < P < ATC.

Question 10

For a perfectly competitive firm,marginal revenue:

Accepted Answer

A) is less than price. 
B) is greater than price. 
C) decreases as the firm increases output. 
D) is equal to price. 
A) is less than price. 
B) is greater than price. 
C) decreases as the firm increases output. 
D) is equal to price.

Question 11

Use the following to answer question:  
-(Table: Total Cost and Output)Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.How many tubs of ice cream will Sergei produce in the long run?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 12

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.Given the market price,the firm's total cost per day is:

Accepted Answer

A) $475. 
B) $600. 
C) $900. 
D) $1,200. 
A) $475. 
B) $600. 
C) $900. 
D) $1,200.

Question 13

Consider a perfectly competitive firm in the short run.Assume that it is sustaining economic losses but continues to produce at the profit-maximizing (loss-minimizing)output.Which statement is FALSE?

Accepted Answer

A) Marginal cost is less than average total cost. 
B) Marginal cost is equal to marginal revenue. 
C) Price is equal to marginal cost. 
D) Marginal cost is less than average variable cost. 
A) Marginal cost is less than average total cost. 
B) Marginal cost is equal to marginal revenue. 
C) Price is equal to marginal cost. 
D) Marginal cost is less than average variable cost.

Question 14

Wenqin is a farmer,and in the short run she produces 100 bushels of wheat.Her average total cost per bushel is $1.75,total revenue is $450,and total fixed costs are $100.Wenqin's:

Accepted Answer

A) average fixed cost is $1.50. 
B) economic profit per bushel is $2.75. 
C) average variable cost is $1.25. 
D) economic profit is $250. 
A) average fixed cost is $1.50. 
B) economic profit per bushel is $2.75. 
C) average variable cost is $1.25. 
D) economic profit is $250.

Question 15

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

Accepted Answer

A) produce at a loss. 
B) produce at a profit. 
C) shut down production. 
D) produce more than the profit-maximizing quantity. 
A) produce at a loss. 
B) produce at a profit. 
C) shut down production. 
D) produce more than the profit-maximizing quantity.

Question 16

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.If all farms are the same size,how much economic profit will each farm earn when the industry is in long-run equilibrium?

Accepted Answer

A) $0 
B) $100 
C) -$200 
D) $1,000 
A) $0 
B) $100 
C) -$200 
D) $1,000

Question 17

Use the following to answer question:  
-(Table: Total Cost and Output)Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.If the market price of a tub of ice cream is $35,how many tubs of ice cream will Sergei produce in the short run?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 18

A perfectly competitive industry with constant costs initially operates in long-run equilibrium.When demand increases:

Accepted Answer

A) in the short run,prices and profits will be higher,but in the long run,price will fall back to its original level and firms will again earn zero economic profit. 
B) prices and profits will be higher than before the demand increase in both the long run and the short run. 
C) in the short run,prices and profits will fall,but in the long run,price will rise back to its initial level,as will profits. 
D) prices and profits will be lower than before the demand increase in both the long run and the short run. 
A) in the short run,prices and profits will be higher,but in the long run,price will fall back to its original level and firms will again earn zero economic profit. 
B) prices and profits will be higher than before the demand increase in both the long run and the short run. 
C) in the short run,prices and profits will fall,but in the long run,price will rise back to its initial level,as will profits. 
D) prices and profits will be lower than before the demand increase in both the long run and the short run.

Question 19

In the short run,a firm will continue to sell its product as long as:

Accepted Answer

A) it is making a positive profit. 
B) the price is greater than average total costs. 
C) the price is greater than average variable costs. 
D) its marginal cost is increasing. 
A) it is making a positive profit. 
B) the price is greater than average total costs. 
C) the price is greater than average variable costs. 
D) its marginal cost is increasing.

Question 20

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

Accepted Answer

A) continue to produce at a loss. 
B) produce at a profit. 
C) shut down production. 
D) reduce its fixed costs. 
A) continue to produce at a loss. 
B) produce at a profit. 
C) shut down production. 
D) reduce its fixed costs.

If a perfectly competitive firm sells 10 units of output at $30 per unit,its marginal revenue is:

In the short run,for a perfectly competitive firm,the portion of the MC curve at or above the shut-down price is also its:

Use the following to answer question: -(Table: Cherry Farm)Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

According to the optimal output rule,profits are maximized when firms produce where the difference between marginal revenue and marginal cost is the largest.

Use the following to answer question: -(Table: Soybean Cost)Use Table: Soybean Cost.If the market price of a bushel of soybeans is $15,what will be the farmer's short-run profit at the optimal level of production?

In the short run,a perfectly competitive firm produces output and incurs an economic loss if:

For a perfectly competitive firm,marginal revenue:

Use the following to answer question: -(Table: Total Cost and Output)Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.How many tubs of ice cream will Sergei produce in the long run?

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.Given the market price,the firm's total cost per day is:

Consider a perfectly competitive firm in the short run.Assume that it is sustaining economic losses but continues to produce at the profit-maximizing (loss-minimizing)output.Which statement is FALSE?

Wenqin is a farmer,and in the short run she produces 100 bushels of wheat.Her average total cost per bushel is $1.75,total revenue is $450,and total fixed costs are $100.Wenqin's:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm 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.If all farms are the same size,how much economic profit will each farm earn when the industry is in long-run equilibrium?

A perfectly competitive industry with constant costs initially operates in long-run equilibrium.When demand increases:

In the short run,a firm will continue to sell its product as long as:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

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

If a perfectly competitive firm sells 10 units of output at $30 per unit,its marginal revenue is:

In the short run,for a perfectly competitive firm,the portion of the MC curve at or above the shut-down price is also its:

Use the following to answer question: -(Table: Cherry Farm)Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

According to the optimal output rule,profits are maximized when firms produce where the difference between marginal revenue and marginal cost is the largest.

Use the following to answer question: -(Table: Soybean Cost)Use Table: Soybean Cost.If the market price of a bushel of soybeans is $15,what will be the farmer's short-run profit at the optimal level of production?

In the short run,a perfectly competitive firm produces output and incurs an economic loss if:

For a perfectly competitive firm,marginal revenue:

Use the following to answer question: -(Table: Total Cost and Output)Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.How many tubs of ice cream will Sergei produce in the long run?

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.Given the market price,the firm's total cost per day is:

Consider a perfectly competitive firm in the short run.Assume that it is sustaining economic losses but continues to produce at the profit-maximizing (loss-minimizing)output.Which statement is FALSE?

Wenqin is a farmer,and in the short run she produces 100 bushels of wheat.Her average total cost per bushel is $1.75,total revenue is $450,and total fixed costs are $100.Wenqin's:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm 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.If all farms are the same size,how much economic profit will each farm earn when the industry is in long-run equilibrium?

A perfectly competitive industry with constant costs initially operates in long-run equilibrium.When demand increases:

In the short run,a firm will continue to sell its product as long as:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

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