Question 1

Explain how a competitive industry's long-run supply curve can be positively sloped.

Accepted Answer

The competitive market's long-run supply curve is positively sloped if the industry experiences an increase in input prices as the industry expands.This is known as an increasing-costs industry.

Question 2

The perfectly competitive firm faces a demand curve that is ________ and ________:

Accepted Answer

A) perfectly inelastic;vertical 
B) perfectly elastic;horizontal 
C) unitary elastic;slopping downward 
D) the same as the market demand for the product;vertical 
A) perfectly inelastic;vertical 
B) perfectly elastic;horizontal 
C) unitary elastic;slopping downward 
D) the same as the market demand for the product;vertical B

Question 3

-Refer to Figure 9.7.This firm's shutdown point corresponds to Point:

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D. B

Question 4

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

Accepted Answer

No,the company is not maximizing profit

Question 5

The added revenue that a firm earns from selling an additional unit of output is:

Accepted Answer

A) total revenue. 
B) marginal revenue. 
C) variable revenue. 
D) fixed revenue. 
A) total revenue. 
B) marginal revenue. 
C) variable revenue. 
D) fixed revenue.

Question 6

What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?

Accepted Answer

A constant-cost industry is an industry

Question 7

Scenario 9.1: 21st Century Pen Inc.produces 2000 pens per day,and hires 20 workers at a cost of $200 per day per worker.The price of each pen is $5 each.21st Century Pen Inc.pays a daily rental rate of $60 on its factory and a daily insurance rate of $20.21st Century Pen Inc.has a ten year lease on the factory and insurance contract for a year,the company has no other expenses.
-Refer to Scenario 9.1.21st Century Pen Inc.'s profit is:

Accepted Answer

A) $5920 per day. 
B) $6000 per day. 
C) $4000 per day. 
D) $4060 per day. 
A) $5920 per day. 
B) $6000 per day. 
C) $4000 per day. 
D) $4060 per day.

Question 8

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

Accepted Answer

Marginal revenue is the additional reven

Question 9

The best example of a monopolistic industry is:

Accepted Answer

A) grocery stores. 
B) toothbrushes. 
C) patented drugs. 
D) automobiles. 
A) grocery stores. 
B) toothbrushes. 
C) patented drugs. 
D) automobiles.

Question 10

Draw a graph of a firm's short-run marginal cost,average variable cost,and average total cost curves.On this graph,identify the firm's short-run supply curve.Explain why this is the firm's short-run supply curve.

Accepted Answer

For a perfectly competitive firm,the mar

Question 11

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be:

Accepted Answer

A) $1,200. 
B) $2,800. 
C) $5,600. 
D) $8,400. 
A) $1,200. 
B) $2,800. 
C) $5,600. 
D) $8,400.

Question 12

-Refer to Figure 9.5.For this farmer to maximize profits he should produce ________ bushels of wheat.

Accepted Answer

A) 6 
B) 9 
C) 12 
D) 16 
A) 6 
B) 9 
C) 12 
D) 16

Question 13

Explain the relationship between price,short-run marginal cost,short-run average cost and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

Accepted Answer

P = SMC =

Question 14

If the prices of inputs do not increase as an industry grows,the industry is a(n):

Accepted Answer

A) decreasing cost industry. 
B) constant cost industry. 
C) increasing cost industry. 
D) nonexistent industry. 
A) decreasing cost industry. 
B) constant cost industry. 
C) increasing cost industry. 
D) nonexistent industry.

Question 15

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be:

Accepted Answer

A) $1,200. 
B) $2,800. 
C) $5,600. 
D) $6,300. 
A) $1,200. 
B) $2,800. 
C) $5,600. 
D) $6,300.

Question 16

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

Accepted Answer

A) more than the average cost 
B) zero 
C) less than the average cost 
D) It cannot be determined. 
A) more than the average cost 
B) zero 
C) less than the average cost 
D) It cannot be determined.

Question 17

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

Accepted Answer

A) 180 
B) 450 
C) 900 
D) 4,500 
A) 180 
B) 450 
C) 900 
D) 4,500

Question 18

UG Tech Inc.is a perfectly competitive firm producing wireless mouses where marginal revenue is equal to marginal cost.The current market price of wireless mouse is $30.00.UG Tech Inc.sells 500 wireless mouses.Its short run average variable cost is $10.00 and its average fixed cost is $5.00.What should UG Tech Inc.do?

Accepted Answer

A) Continue to produce because price exceeds short run average variable cost. 
B) Shut down and produce zero sandwiches because price is less than short run average variable cost. 
C) Decrease production so that short run average variable cost will decrease. 
D) Increase production so that average fixed cost will decrease. 
A) Continue to produce because price exceeds short run average variable cost. 
B) Shut down and produce zero sandwiches because price is less than short run average variable cost. 
C) Decrease production so that short run average variable cost will decrease. 
D) Increase production so that average fixed cost will decrease.

Question 19

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should make the output level where:

Accepted Answer

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

Question 20

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive profit maximizing firm should:

Accepted Answer

A) operate in the short run. 
B) shut down in the short run. 
C) realize a normal profit in the short run. 
D) operate in the long run. 
A) operate in the short run. 
B) shut down in the short run. 
C) realize a normal profit in the short run. 
D) operate in the long run.

Explain how a competitive industry's long-run supply curve can be positively sloped.

The perfectly competitive firm faces a demand curve that is and :

-Refer to Figure 9.7.This firm's shutdown point corresponds to Point:

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

The added revenue that a firm earns from selling an additional unit of output is:

What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

The best example of a monopolistic industry is:

Draw a graph of a firm's short-run marginal cost,average variable cost,and average total cost curves.On this graph,identify the firm's short-run supply curve.Explain why this is the firm's short-run supply curve.

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be:

-Refer to Figure 9.5.For this farmer to maximize profits he should produce ________ bushels of wheat.

Explain the relationship between price,short-run marginal cost,short-run average cost and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

If the prices of inputs do not increase as an industry grows,the industry is a(n):

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be:

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should make the output level where:

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive profit maximizing firm should:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 9: Perfect Competition

Explain how a competitive industry's long-run supply curve can be positively sloped.

The perfectly competitive firm faces a demand curve that is ________ and ________:

-Refer to Figure 9.7.This firm's shutdown point corresponds to Point:

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

The added revenue that a firm earns from selling an additional unit of output is:

What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

The best example of a monopolistic industry is:

Draw a graph of a firm's short-run marginal cost,average variable cost,and average total cost curves.On this graph,identify the firm's short-run supply curve.Explain why this is the firm's short-run supply curve.

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be:

-Refer to Figure 9.5.For this farmer to maximize profits he should produce ________ bushels of wheat.

Explain the relationship between price,short-run marginal cost,short-run average cost and long-run average cost in the final long-run competitive equilibrium condition.What are economic profits in this long-run equilibrium condition?

If the prices of inputs do not increase as an industry grows,the industry is a(n):

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be:

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should make the output level where:

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive profit maximizing firm should:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

The perfectly competitive firm faces a demand curve that is and :