Question 1

The goal of a perfectly competitive firm is to maximize its

Accepted Answer

A)  normal profit. 
B)  revenue. 
C)  output. 
D)  economic profit. 
A)  normal profit. 
B)  revenue. 
C)  output. 
D)  economic profit.

Question 2

-In the above table, the price of the product is

Accepted Answer

A)  $30. 
B)  $147. 
C)  $150. 
D)  $180. 
A)  $30. 
B)  $147. 
C)  $150. 
D)  $180.

Question 3

A perfectly competitive firm's demand curve is

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line. 
D)  a horizontal line. 
A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line. 
D)  a horizontal line.

Question 4

Which of the following is NOT an assumption of perfect competition?

Accepted Answer

A)  many firms 
B)  many buyers 
C)  restrictions on entry into the market 
D)  each firm sells an identical product 
A)  many firms 
B)  many buyers 
C)  restrictions on entry into the market 
D)  each firm sells an identical product

Question 5

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 4 cents per page. With no change in demand and technology, in the long run, the price will

Accepted Answer

A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  fall to 2 cents per page. 
D)  fall to 1 cent per page. 
A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  fall to 2 cents per page. 
D)  fall to 1 cent per page.

Question 6

In perfect competition, at all levels of output the market price is the same as the firm's ________.

Accepted Answer

A)  marginal revenue 
B)  normal profit 
C)  average variable cost 
D)  fixed cost 
A)  marginal revenue 
B)  normal profit 
C)  average variable cost 
D)  fixed cost

Question 7

The smallest quantity of output at which long-run average cost is at a minimum is a firm's ________.

Accepted Answer

A)  maximum efficient scale 
B)  profit-maximizing output point 
C)  minimum efficient scale 
D)  efficient output point 
A)  maximum efficient scale 
B)  profit-maximizing output point 
C)  minimum efficient scale 
D)  efficient output point

Question 8

A perfectly competitive firm maximizes its profit by

Accepted Answer

A)  setting its price so that it exceeds the marginal revenue. 
B)  choosing to produce the quantity that sets MC equal to MR. 
C)  cutting wages. 
D)  manipulating demand. 
A)  setting its price so that it exceeds the marginal revenue. 
B)  choosing to produce the quantity that sets MC equal to MR. 
C)  cutting wages. 
D)  manipulating demand.

Question 9

Fresno County, California is the largest agricultural producing county in the country and almonds are an important crop with more than 99,000 acres harvested. Each acre produces about a ton of almonds and sold at a price of $4300 a ton. The Sagardia Brothers grew 600 acres of almonds that year and they are price takers. What is the Brother's total revenue?

Accepted Answer

A)  $4300 
B)  $4900 
C)  $59.4 million 
D)  $2.58 million 
A)  $4300 
B)  $4900 
C)  $59.4 million 
D)  $2.58 million

Question 10

The short-run supply curve for a perfectly competitive firm is its

Accepted Answer

A)  marginal cost curve above the horizontal axis. 
B)  marginal cost curve above its shutdown point. 
C)  average cost curve above the horizontal axis. 
D)  average cost curve above its shutdown point. 
A)  marginal cost curve above the horizontal axis. 
B)  marginal cost curve above its shutdown point. 
C)  average cost curve above the horizontal axis. 
D)  average cost curve above its shutdown point.

Question 11

In a perfectly competitive market,

Accepted Answer

A)  each firm sets its own price so that it is different from its competitors. 
B)  an economic profit is certain. 
C)  each firm takes the good's price as given to it by the market. 
D)  consumers are persuaded by advertising. 
A)  each firm sets its own price so that it is different from its competitors. 
B)  an economic profit is certain. 
C)  each firm takes the good's price as given to it by the market. 
D)  consumers are persuaded by advertising.

Question 12

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

Accepted Answer

A)  highest; highest 
B)  lowest; lowest 
C)  highest; lowest 
D)  lowest; highest 
A)  highest; highest 
B)  lowest; lowest 
C)  highest; lowest 
D)  lowest; highest

Question 13

-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 marginal revenue from the 2nd sandwich sold?

Accepted Answer

A)  $10.00 
B)  $13.50 
C)  $3.00 
D)  $6.00 
A)  $10.00 
B)  $13.50 
C)  $3.00 
D)  $6.00

Question 14

Which of the following is NOT an assumption of perfectly competitive markets?

Accepted Answer

A)  many buyers and many sellers 
B)  no restriction on entry 
C)  complete information about prices 
D)  new entrants have higher costs 
A)  many buyers and many sellers 
B)  no restriction on entry 
C)  complete information about prices 
D)  new entrants have higher costs

Question 15

If firms in a perfectly competitive industry are making zero economic profit, then

Accepted Answer

A)  some of those firms will leave the industry, because firms cannot persistently go without making economic profit. 
B)  new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. 
C)  there is no incentive for either entry or exit. 
D)  some of the firms will temporarily shut down. 
A)  some of those firms will leave the industry, because firms cannot persistently go without making economic profit. 
B)  new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. 
C)  there is no incentive for either entry or exit. 
D)  some of the firms will temporarily shut down.

Question 16

-Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. The maximum profit attainable by Sue's Sea Shells by the Sea Shore is

Accepted Answer

A)  $262.00 per day. 
B)  $262.50 per day. 
C)  $302.00 per day. 
D)  $302.50 per day. 
A)  $262.00 per day. 
B)  $262.50 per day. 
C)  $302.00 per day. 
D)  $302.50 per day.

Question 17

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

Accepted Answer

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

Question 18

-In the above figure, at what price does a perfectly competitive firm make zero economic profit?

Accepted Answer

A)  $4 per unit 
B)  $8 per unit 
C)  $12 per unit 
D)  $16 per unit 
A)  $4 per unit 
B)  $8 per unit 
C)  $12 per unit 
D)  $16 per unit

Question 19

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

Accepted Answer

A)  $11.00. 
B)  $12.00. 
C)  $16.00. 
D)  $22.00. 
A)  $11.00. 
B)  $12.00. 
C)  $16.00. 
D)  $22.00.

Question 20

In the long-run equilibrium, perfectly competitive firms produce where

Accepted Answer

A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average revenue is zero. 
D)  All of the above are correct. 
A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average revenue is zero. 
D)  All of the above are correct.

Exam 12: Perfect Competition

The goal of a perfectly competitive firm is to maximize its

-In the above table, the price of the product is

A perfectly competitive firm's demand curve is

Which of the following is NOT an assumption of perfect competition?

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 4 cents per page. With no change in demand and technology, in the long run, the price will

In perfect competition, at all levels of output the market price is the same as the firm's ________.

The smallest quantity of output at which long-run average cost is at a minimum is a firm's ________.

A perfectly competitive firm maximizes its profit by

The short-run supply curve for a perfectly competitive firm is its

In a perfectly competitive market,

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

-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 marginal revenue from the 2nd sandwich sold?

Which of the following is NOT an assumption of perfectly competitive markets?

If firms in a perfectly competitive industry are making zero economic profit, then

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

-In the above figure, at what price does a perfectly competitive firm make zero economic profit?

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

In the long-run equilibrium, perfectly competitive firms produce where

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

In the long-run equilibrium in a perfectly competitive market, the firms produce at the possible average total cost and the price equals the possible average total cost.