Question 1

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

Accepted Answer

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

Question 2

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

Accepted Answer

A)  fixed costs. 
B)  variable costs. 
C)  external costs. 
D)  depreciation due to machinery becoming obsolete. 
A)  fixed costs. 
B)  variable costs. 
C)  external costs. 
D)  depreciation due to machinery becoming obsolete.

Question 3

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit?

Accepted Answer

A)  $6 per hour 
B)  $1 per hour 
C)  -$6 per hour 
D)  zero 
A)  $6 per hour 
B)  $1 per hour 
C)  -$6 per hour 
D)  zero

Question 4

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his economic loss will be

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $1,200. 
D)  $4,000. 
A)  $0. 
B)  $1,000. 
C)  $1,200. 
D)  $4,000.

Question 5

-In the above table, if the firm produces 2 units of output, it will

Accepted Answer

A)  make an economic profit of $9. 
B)  make an economic profit of $60. 
C)  incur an economic loss of $9. 
D)  incur an economic loss of $60. 
A)  make an economic profit of $9. 
B)  make an economic profit of $60. 
C)  incur an economic loss of $9. 
D)  incur an economic loss of $60.

Question 6

New reports indicate that eating turnips helps people remain healthy. The news shifts the demand curve for turnips rightward. In response, new farms enter the turnip industry. During the period in which the new farms are entering, the price of a turnip ________ and the economic profit of each existing firm ________.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls

Question 7

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

Accepted Answer

A) True 
 B)False

Question 8

-In a perfectly competitive industry, the demand for a single firm's product is

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  as elastic as the market demand. 
D)  inelastic, but not perfectly inelastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  as elastic as the market demand. 
D)  inelastic, but not perfectly inelastic.

Question 9

-In the above figure, the line represented by the "4" is the

Accepted Answer

A)  average fixed cost. 
B)  marginal revenue. 
C)  average total cost. 
D)  marginal cost. 
A)  average fixed cost. 
B)  marginal revenue. 
C)  average total cost. 
D)  marginal cost.

Question 10

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 11

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit, in

Question 12

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit.
a) Find the profit maximizing level of output for this firm.
b) How much economic profit is the firm making?

Accepted Answer

@#IMG-DLM& a) Total revenue equals price times qua

Question 13

-The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________.

Accepted Answer

A)  increases; zero; price of apples will return to their original level 
B)  remains the same; zero; orchards will be replanted and growers will make normal profits 
C)  increases; zero; orchards will be replanted and economic profit will return to zero 
D)  increases; positive; orchards will be replanted and economic profit will return to zero 
A)  increases; zero; price of apples will return to their original level 
B)  remains the same; zero; orchards will be replanted and growers will make normal profits 
C)  increases; zero; orchards will be replanted and economic profit will return to zero 
D)  increases; positive; orchards will be replanted and economic profit will return to zero

Question 14

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

Accepted Answer

A)  zero 
B)  between 0 and $0.50 per hour 
C)  between $0.51 and $1.00 per hour 
D)  more than $1.00 per hour 
A)  zero 
B)  between 0 and $0.50 per hour 
C)  between $0.51 and $1.00 per hour 
D)  more than $1.00 per hour

Question 15

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

Accepted Answer

A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity. 
A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity.

Question 16

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

Accepted Answer

A)  exit and the price will fall. 
B)  exit and the price will rise. 
C)  enter and the price might either rise or fall. 
D)  exit and the price might either rise or fall. 
A)  exit and the price will fall. 
B)  exit and the price will rise. 
C)  enter and the price might either rise or fall. 
D)  exit and the price might either rise or fall.

Question 17

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 18

A perfectly competitive firm definitely will shut down in the short run if its price is below its average total cost.

Accepted Answer

A) True 
 B)False

Question 19

-The figure above shows the costs for a grower in the perfectly competitive turnip industry. If the price is $1,400 for a ton of turnips, the firm is

Accepted Answer

A)  making an economic profit. 
B)  making zero economic profit. 
C)  incurring an economic loss. 
D)  More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss. 
A)  making an economic profit. 
B)  making zero economic profit. 
C)  incurring an economic loss. 
D)  More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

Question 20

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

Accepted Answer

A)  minimum average variable cost, AVC. 
B)  total variable cost, TVC. 
C)  total fixed cost, TFC. 
D)  average total cost, ATC. 
A)  minimum average variable cost, AVC. 
B)  total variable cost, TVC. 
C)  total fixed cost, TFC. 
D)  average total cost, ATC.

Exam 12: Perfect Competition

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit?

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his economic loss will be

-In the above table, if the firm produces 2 units of output, it will

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

-In a perfectly competitive industry, the demand for a single firm's product is

-In the above figure, the line represented by the "4" is the

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a) Find the profit maximizing level of output for this firm. b) How much economic profit is the firm making?

-The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________.

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

A perfectly competitive firm definitely will shut down in the short run if its price is below its average total cost.

-The figure above shows the costs for a grower in the perfectly competitive turnip industry. If the price is $1,400 for a ton of turnips, the firm is

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

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

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples and the remaining apple growers make economic profit. In the long run, the .