Question 1

An efficient allocation is achieved when

Accepted Answer

A) consumers are selecting points on their demand curves. 
B) producers are selecting points on their supply curves. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) all of the above 
E) none of the above 
A) consumers are selecting points on their demand curves. 
B) producers are selecting points on their supply curves. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) all of the above 
E) none of the above

Question 2

Use the table below to answer the following questions.
Table 11.2.3  
-Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.Brenda's total fixed cost is

Accepted Answer

A) $3 an hour. 
B) $4 an hour. 
C) $7 an hour. 
D) $29 an hour. 
E) zero. 
A) $3 an hour. 
B) $4 an hour. 
C) $7 an hour. 
D) $29 an hour. 
E) zero.

Question 3

If firms in a perfectly competitive market are incurring an economic loss,some firms will exit.This exit shifts the market

Accepted Answer

A) demand curve leftward,and the market price falls. 
B) demand curve rightward,and the market price rises. 
C) supply curve leftward,and the market price rises. 
D) supply curve rightward,and the market price falls. 
E) supply curve leftward and the market demand curve rightward. 
A) demand curve leftward,and the market price falls. 
B) demand curve rightward,and the market price rises. 
C) supply curve leftward,and the market price rises. 
D) supply curve rightward,and the market price falls. 
E) supply curve leftward and the market demand curve rightward.

Question 4

Consumer surplus

Accepted Answer

A) plus producer surplus is maximized when resources are used efficiently. 
B) is maximized when the market outcome is efficient. 
C) equals total revenue minus opportunity cost. 
D) equals total revenue minus marginal cost. 
E) is maximized in the short run but not in the long run. 
A) plus producer surplus is maximized when resources are used efficiently. 
B) is maximized when the market outcome is efficient. 
C) equals total revenue minus opportunity cost. 
D) equals total revenue minus marginal cost. 
E) is maximized in the short run but not in the long run.

Question 5

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,the firm

Accepted Answer

A) cannot increase its economic profit. 
B) must be making an economic profit. 
C) will decrease its output to increase economic profit. 
D) will increase its output to increase economic profit. 
E) will lower the price. 
A) cannot increase its economic profit. 
B) must be making an economic profit. 
C) will decrease its output to increase economic profit. 
D) will increase its output to increase economic profit. 
E) will lower the price.

Question 6

Firms in a perfectly competitive industry are in long-run equilibrium.A new technology becomes available that lowers production costs.Choose the statement that is incorrect.

Accepted Answer

A) The first firms to use the new technology make an economic profit. 
B) As more firms begin to use the new technology,market supply increases. 
C) Firms that use the old technology incur economic losses. 
D) Old technology firms exit the market. 
E) In the long run,price is equal to average variable cost. 
A) The first firms to use the new technology make an economic profit. 
B) As more firms begin to use the new technology,market supply increases. 
C) Firms that use the old technology incur economic losses. 
D) Old technology firms exit the market. 
E) In the long run,price is equal to average variable cost.

Question 7

Use the table below to answer the following questions.
Table 11.2.1  
-Refer to Table 11.2.1,which gives the total revenue schedule and total cost schedule of a perfectly competitive firm.The marginal cost of increasing production from 4 units to 5 units is

Accepted Answer

A) $16. 
B) $128. 
C) $100. 
D) $116. 
E) $30. 
A) $16. 
B) $128. 
C) $100. 
D) $116. 
E) $30.

Question 8

In a perfectly competitive market,the market price is $8.An individual firm is producing the output at which MC = $8.AVC at that output is $10.What should the firm do to maximize its economic profit in the short run?

Accepted Answer

A) shut down 
B) expand output 
C) contract output but continue to produce 
D) leave output unchanged 
E) raise the price 
A) shut down 
B) expand output 
C) contract output but continue to produce 
D) leave output unchanged 
E) raise the price

Question 9

The shutdown point occurs at the point of minimum

Accepted Answer

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

Question 10

Use the table below to answer the following questions.
Table 11.1.1  
-Refer to Table 11.1.1 which gives the demand schedule for a perfectly competitive firm.If the quantity sold by the firm rises from 5 to 6,marginal revenue is

Accepted Answer

A) $15. 
B) $30. 
C) $75. 
D) $90. 
E) $105. 
A) $15. 
B) $30. 
C) $75. 
D) $90. 
E) $105.

Question 11

Use the information below to answer the following questions.
Fact 11.2.1 GM to Cut Production and Jobs
General Motors will temporarily idle five U.S.assembly plants that build sedans and coupes,such as the Chevrolet Cruze,Cadillac CTS,and Chevy Camaro,as American motorists by the millions shift from passenger cars to utility vehicles and other light trucks.
Source: The Toronto Star,December 21,2016
-Refer to Fact 11.2.1.GM will start producing the Chevy Volt again when price is greater than

Accepted Answer

A) average variable cost. 
B) total variable cost. 
C) average fixed cost. 
D) total fixed cost. 
E) total cost. 
A) average variable cost. 
B) total variable cost. 
C) average fixed cost. 
D) total fixed cost. 
E) total cost.

Question 12

The slope of a perfectly competitive firm's demand curve is

Accepted Answer

A) equal to infinity. 
B) equal to zero. 
C) equal to 1. 
D) greater than 1. 
E) negative. 
A) equal to infinity. 
B) equal to zero. 
C) equal to 1. 
D) greater than 1. 
E) negative.

Question 13

Use the figure below to answer the following questions.   Figure 11.2.2
-Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is incurring a loss at

Accepted Answer

A) point A. 
B) point B. 
C) point C. 
D) point D. 
E) both points B and D. 
A) point A. 
B) point B. 
C) point C. 
D) point D. 
E) both points B and D.

Question 14

Choose the statement that is incorrect.

Accepted Answer

A) Resources are used efficiently when marginal social benefit equals marginal social cost. 
B) Competitive equilibrium achieves an efficient outcome. 
C) Competitive equilibrium maximizes the gains from trade. 
D) When firms in perfect competition are away from long-run equilibrium,either entry or exit is taking place and the market is still efficient. 
E) Producer surplus is maximized at the competitive equilibrium. 
A) Resources are used efficiently when marginal social benefit equals marginal social cost. 
B) Competitive equilibrium achieves an efficient outcome. 
C) Competitive equilibrium maximizes the gains from trade. 
D) When firms in perfect competition are away from long-run equilibrium,either entry or exit is taking place and the market is still efficient. 
E) Producer surplus is maximized at the competitive equilibrium.

An efficient allocation is achieved when

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.Brenda's total fixed cost is

If firms in a perfectly competitive market are incurring an economic loss,some firms will exit.This exit shifts the market

Consumer surplus

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,the firm

Firms in a perfectly competitive industry are in long-run equilibrium.A new technology becomes available that lowers production costs.Choose the statement that is incorrect.

Use the table below to answer the following questions. Table 11.2.1 -Refer to Table 11.2.1,which gives the total revenue schedule and total cost schedule of a perfectly competitive firm.The marginal cost of increasing production from 4 units to 5 units is

In a perfectly competitive market,the market price is $8.An individual firm is producing the output at which MC = $8.AVC at that output is $10.What should the firm do to maximize its economic profit in the short run?

The shutdown point occurs at the point of minimum

Use the table below to answer the following questions. Table 11.1.1 -Refer to Table 11.1.1 which gives the demand schedule for a perfectly competitive firm.If the quantity sold by the firm rises from 5 to 6,marginal revenue is

The slope of a perfectly competitive firm's demand curve is

Use the figure below to answer the following questions. Figure 11.2.2 -Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is incurring a loss at

Choose the statement that is incorrect.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 11: Perfect Competition

An efficient allocation is achieved when

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.Brenda's total fixed cost is

If firms in a perfectly competitive market are incurring an economic loss,some firms will exit.This exit shifts the market

Consumer surplus

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,the firm

Firms in a perfectly competitive industry are in long-run equilibrium.A new technology becomes available that lowers production costs.Choose the statement that is incorrect.

Use the table below to answer the following questions. Table 11.2.1 -Refer to Table 11.2.1,which gives the total revenue schedule and total cost schedule of a perfectly competitive firm.The marginal cost of increasing production from 4 units to 5 units is

In a perfectly competitive market,the market price is $8.An individual firm is producing the output at which MC = $8.AVC at that output is $10.What should the firm do to maximize its economic profit in the short run?

The shutdown point occurs at the point of minimum

Use the table below to answer the following questions. Table 11.1.1 -Refer to Table 11.1.1 which gives the demand schedule for a perfectly competitive firm.If the quantity sold by the firm rises from 5 to 6,marginal revenue is

The slope of a perfectly competitive firm's demand curve is

Use the figure below to answer the following questions. Figure 11.2.2 -Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is incurring a loss at

Choose the statement that is incorrect.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters