Question 1

For oligopolistic industries the demand is more elastic than demand facing monopolistically competitive industries.

Accepted Answer

A) True 
 B)False

Question 2

Since the ice production is constant,the supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 3

If a firm is producing where marginal revenue is greater than marginal cost:

Accepted Answer

A) the revenue gained by producing one more unit of output exceeds the additional cost incurred by doing so. 
B) the revenue gained by producing one more unit of output equals the additional cost incurred by doing so. 
C) the revenue gained by producing one more unit of output is less than the additional cost incurred by doing so. 
D) the firm is already maximizing profits because revenue is being increased by more than costs. 
A) the revenue gained by producing one more unit of output exceeds the additional cost incurred by doing so. 
B) the revenue gained by producing one more unit of output equals the additional cost incurred by doing so. 
C) the revenue gained by producing one more unit of output is less than the additional cost incurred by doing so. 
D) the firm is already maximizing profits because revenue is being increased by more than costs.

Question 4

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's:

Accepted Answer

A) AVC curve to the left of Point B. 
B) marginal cost curve above Point A. 
C) marginal cost curve above Point B. 
D) marginal cost curve above Point D. 
A) AVC curve to the left of Point B. 
B) marginal cost curve above Point A. 
C) marginal cost curve above Point B. 
D) marginal cost curve above Point D.

Question 5

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

Accepted Answer

A) More firms will enter this industry,causing the industry supply schedule to shift to the right and the firms' LRAC to shift down. 
B) More firms will enter this industry,causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift up. 
C) Firms will exit this industry,causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift down. 
D) Firms will exit this industry,causing the industry supply schedule to shift to the left and the firms' LRAC curve to shift down. 
A) More firms will enter this industry,causing the industry supply schedule to shift to the right and the firms' LRAC to shift down. 
B) More firms will enter this industry,causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift up. 
C) Firms will exit this industry,causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift down. 
D) Firms will exit this industry,causing the industry supply schedule to shift to the left and the firms' LRAC curve to shift down.

Question 6

The owner of Tie-Dyed T-shirts,a perfectly competitive firm,has hired you to give him some economic advice.He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts.At this output his MC is $20,his SAVC is $15 and his SATC is $25.What would you recommend to him?

Accepted Answer

A) to continue producing in the short run,as his loss from production is less than his fixed costs,but to exit the industry in the long run if there are no changes in economic conditions 
B) to shut down in the short run,as he is incurring a loss and to leave the industry in the long run,if there are no changes in economic conditions 
C) to continue to produce in the short run,even though he is earning a loss,and to expand in the future with the hope of increasing market share and total revenue 
D) You tell him you cannot make any recommendations until you know what his fixed costs are. 
A) to continue producing in the short run,as his loss from production is less than his fixed costs,but to exit the industry in the long run if there are no changes in economic conditions 
B) to shut down in the short run,as he is incurring a loss and to leave the industry in the long run,if there are no changes in economic conditions 
C) to continue to produce in the short run,even though he is earning a loss,and to expand in the future with the hope of increasing market share and total revenue 
D) You tell him you cannot make any recommendations until you know what his fixed costs are.

Question 7

Table 9.3
-Table 9.3 shows the short-run cost data for the XYZ Widget Company.If widgets sell for $8 each and XYZ's total fixed costs equal $50,what will the firm do? Explain.

Accepted Answer

The firm's marginal cost is as follows:

Question 8

-Refer to Figure 9.6.At a market price of $9,this perfectly competitive profit maximizing firm should produce ________ units.

Accepted Answer

A) 30 
B) 25 
C) 20 
D) 0 
A) 30 
B) 25 
C) 20 
D) 0

Question 9

Monopolistic industries are characterized by a homogeneous product.

Accepted Answer

A) True 
 B)False

Question 10

Table 9.2
-Consider a competitive firm that produces tomatoes.The fixed costs are $10 per bushel and the relationship between VC and output is shown in Table 9.2.Compute AVC and MC.How much output will be supplied if P = $45 and the firm wants to maximize profits? What if P = $55? What are profits if P = $60? What is the relationship between marginal cost,average variable cost,and the firm's supply curve?

Accepted Answer

@#IMG-DLM& Output = 2 if P = $45.Output = 4 if P =

Question 11

A milk company in a perfectly competitive industry is producing 10000 gallons of milk,its profit-maximizing quantity.Industry price for a gallon of milk is $3.50,total fixed costs are $5,000,and total variable costs are $10,000.The firm's economic profit is:

Accepted Answer

A) $35,000. 
B) $30,000. 
C) $20,000. 
D) $15,000. 
A) $35,000. 
B) $30,000. 
C) $20,000. 
D) $15,000.

Question 12

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce:

Accepted Answer

A) 200 bushels of soybeans. 
B) 700 bushels of soybeans. 
C) 1,000 bushels of soybeans. 
D) a level of output that is indeterminate from this information. 
A) 200 bushels of soybeans. 
B) 700 bushels of soybeans. 
C) 1,000 bushels of soybeans. 
D) a level of output that is indeterminate from this information.

Question 13

If a firm in a perfectly competitive market tries to raise its price above the going market price,then:

Accepted Answer

A) it will sell more output. 
B) it will sell the same amount of output as before. 
C) it will not be able to sell any output. 
D) it will sell some output,but not as much as before. 
A) it will sell more output. 
B) it will sell the same amount of output as before. 
C) it will not be able to sell any output. 
D) it will sell some output,but not as much as before.

Question 14

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

Accepted Answer

The statement is true.When fir

Question 15

Toothpicks are sold in a perfectly competitive market.The market price is currently $3 per box of one hundred toothpicks.At its current level of production,a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is $3.25 per box of one hundred toothpicks.Given this information,is the toothpick industry in equilibrium? Explain.

Accepted Answer

No,the industry is not in equilibrium.In

Question 16

In a perfectly competitive market,an individual firm cannot charge any price it wants.

Accepted Answer

A) True 
 B)False

Question 17

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should:

Accepted Answer

A) lower its price. 
B) raise its price. 
C) increase production. 
D) decrease production. 
A) lower its price. 
B) raise its price. 
C) increase production. 
D) decrease production.

Question 18

If there is an increase in demand in the long run for an increasing cost industry,the market price will fall.

Accepted Answer

A) True 
 B)False

Question 19

In perfect competition,the marginal revenue curve:

Accepted Answer

A) and the demand curve facing the firm are identical. 
B) is always above the demand curve facing the firm. 
C) is always below the demand curve facing the firm. 
D) intersects the demand curve when marginal revenue is minimized. 
A) and the demand curve facing the firm are identical. 
B) is always above the demand curve facing the firm. 
C) is always below the demand curve facing the firm. 
D) intersects the demand curve when marginal revenue is minimized.

Question 20

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce:

Accepted Answer

A) 350 bales of hay. 
B) 500 bales of hay. 
C) 750 bales of hay. 
D) a level of output that is indeterminate from this information. 
A) 350 bales of hay. 
B) 500 bales of hay. 
C) 750 bales of hay. 
D) a level of output that is indeterminate from this information.

For oligopolistic industries the demand is more elastic than demand facing monopolistically competitive industries.

Since the ice production is constant,the supply curve is vertical.

If a firm is producing where marginal revenue is greater than marginal cost:

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's:

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

Table 9.3 -Table 9.3 shows the short-run cost data for the XYZ Widget Company.If widgets sell for $8 each and XYZ's total fixed costs equal $50,what will the firm do? Explain.

-Refer to Figure 9.6.At a market price of $9,this perfectly competitive profit maximizing firm should produce ________ units.

Monopolistic industries are characterized by a homogeneous product.

A milk company in a perfectly competitive industry is producing 10000 gallons of milk,its profit-maximizing quantity.Industry price for a gallon of milk is $3.50,total fixed costs are $5,000,and total variable costs are $10,000.The firm's economic profit is:

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce:

If a firm in a perfectly competitive market tries to raise its price above the going market price,then:

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

In a perfectly competitive market,an individual firm cannot charge any price it wants.

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should:

If there is an increase in demand in the long run for an increasing cost industry,the market price will fall.

In perfect competition,the marginal revenue curve:

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce:

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

For oligopolistic industries the demand is more elastic than demand facing monopolistically competitive industries.

Since the ice production is constant,the supply curve is vertical.

If a firm is producing where marginal revenue is greater than marginal cost:

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's:

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

Table 9.3 -Table 9.3 shows the short-run cost data for the XYZ Widget Company.If widgets sell for $8 each and XYZ's total fixed costs equal $50,what will the firm do? Explain.

-Refer to Figure 9.6.At a market price of $9,this perfectly competitive profit maximizing firm should produce ________ units.

Monopolistic industries are characterized by a homogeneous product.

A milk company in a perfectly competitive industry is producing 10000 gallons of milk,its profit-maximizing quantity.Industry price for a gallon of milk is $3.50,total fixed costs are $5,000,and total variable costs are $10,000.The firm's economic profit is:

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce:

If a firm in a perfectly competitive market tries to raise its price above the going market price,then:

Comment on the following statement: "When firms are earning positive profits,the industry supply curve will shift to the right."

In a perfectly competitive market,an individual firm cannot charge any price it wants.

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should:

If there is an increase in demand in the long run for an increasing cost industry,the market price will fall.

In perfect competition,the marginal revenue curve:

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce:

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