Question 1

In perfect competition, the product of a single firm

Accepted Answer

A)  has many perfect substitutes produced by other firms. 
B)  has many perfect complements produced by other firms. 
C)  is sold under many differing brand names. 
D)  is sold to different customers at different prices. 
A)  has many perfect substitutes produced by other firms. 
B)  has many perfect complements produced by other firms. 
C)  is sold under many differing brand names. 
D)  is sold to different customers at different prices.

Question 2

-In the above figure, if the firm increases its output from Q2 to Q3, it will

Accepted Answer

A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit. 
A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit.

Question 3

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

Accepted Answer

If the market price rises, a p

Question 4

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

Accepted Answer

A)  average total cost. 
B)  average marginal cost. 
C)  average variable cost. 
D)  wage rate. 
A)  average total cost. 
B)  average marginal cost. 
C)  average variable cost. 
D)  wage rate.

Question 5

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

Accepted Answer

A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down. 
A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down.

Question 6

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

Accepted Answer

A)  incurring an economic loss equal to $119.00. 
B)  incurring an economic loss equal to $123.50. 
C)  incurring an economic loss equal to $187.00. 
D)  making zero economic profit. 
A)  incurring an economic loss equal to $119.00. 
B)  incurring an economic loss equal to $123.50. 
C)  incurring an economic loss equal to $187.00. 
D)  making zero economic profit.

Question 7

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

Accepted Answer

A)  total revenue equals total variable cost. 
B)  marginal revenue equals marginal cost. 
C)  total revenue equals total cost. 
D)  marginal revenue is equal to total revenue. 
A)  total revenue equals total variable cost. 
B)  marginal revenue equals marginal cost. 
C)  total revenue equals total cost. 
D)  marginal revenue is equal to total revenue.

Question 8

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

Accepted Answer

A)  earn an economic profit. 
B)  not suffer any losses. 
C)  earn the largest profit possible. 
D)  survive in the long run. 
A)  earn an economic profit. 
B)  not suffer any losses. 
C)  earn the largest profit possible. 
D)  survive in the long run.

Question 9

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 10

-Based on the table above, what is the marginal revenue of the tenth unit of output?

Accepted Answer

A)  $190 
B)  $100 
C)  $10 
D)  $9 
A)  $190 
B)  $100 
C)  $10 
D)  $9

Question 11

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. In the long run, firms will ________ the market and the market ________ will ________.

Accepted Answer

A)  leave; supply; decrease 
B)  enter; supply; increase 
C)  leave; demand; decrease 
D)  enter; supply; decrease 
A)  leave; supply; decrease 
B)  enter; supply; increase 
C)  leave; demand; decrease 
D)  enter; supply; decrease

Question 12

In the long run, perfectly competitive firms cannot earn an economic profit.

Accepted Answer

A) True 
 B)False

Question 13

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________.

Accepted Answer

A)  exit; covering only their total fixed costs 
B)  enter; making zero economic profit 
C)  exit; producing at the minimum point on their long-run average cost curve 
D)  enter; making zero normal profit 
A)  exit; covering only their total fixed costs 
B)  enter; making zero economic profit 
C)  exit; producing at the minimum point on their long-run average cost curve 
D)  enter; making zero normal profit

Question 14

-The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,000 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 15

When a firm is considered to be a "price taker" that means that the firm

Accepted Answer

A)  can charge any price that it wants to charge, that is, "take" any price it wants. 
B)  pays a fixed price for all of its inputs. 
C)  will accept ("take") the lowest price that its customers offer. 
D)  cannot influence the market price of the good that it sells. 
A)  can charge any price that it wants to charge, that is, "take" any price it wants. 
B)  pays a fixed price for all of its inputs. 
C)  will accept ("take") the lowest price that its customers offer. 
D)  cannot influence the market price of the good that it sells.

Question 16

The firm's supply curve is its

Accepted Answer

A)  marginal cost curve, at all points above the minimum average variable cost curve. 
B)  marginal cost curve, at all points above the minimum average fixed cost curve. 
C)  marginal cost curve, at all points above the minimum average total cost curve. 
D)  marginal revenue curve, at all points above the minimum average total cost curve. 
A)  marginal cost curve, at all points above the minimum average variable cost curve. 
B)  marginal cost curve, at all points above the minimum average fixed cost curve. 
C)  marginal cost curve, at all points above the minimum average total cost curve. 
D)  marginal revenue curve, at all points above the minimum average total cost curve.

Question 17

-The above figure shows the total revenue curve for Dizzy Discs. The demand curve for CDs sold by Dizzy Discs

Accepted Answer

A)  has negative slope. 
B)  has positive slope. 
C)  is horizontal. 
D)  is vertical. 
A)  has negative slope. 
B)  has positive slope. 
C)  is horizontal. 
D)  is vertical.

Question 18

-The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals $16 per unit,

Accepted Answer

A)  the market is in its long-run equilibrium. 
B)  over time, firms will leave this market. 
C)  the firm is making zero economic profit. 
D)  over time, the price will fall as new firms enter the market. 
A)  the market is in its long-run equilibrium. 
B)  over time, firms will leave this market. 
C)  the firm is making zero economic profit. 
D)  over time, the price will fall as new firms enter the market.

Question 19

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

Accepted Answer

A)  because this firm's output is a perfect substitute for any other firm's output. 
B)  because this firm is a price maker. 
C)  only in the long run. 
D)  because there are many buyers in this market. 
A)  because this firm's output is a perfect substitute for any other firm's output. 
B)  because this firm is a price maker. 
C)  only in the long run. 
D)  because there are many buyers in this market.

Question 20

-The table above shows the total cost incurred by Sue's Coat Shop, a perfectly competitive firm. If the market price of a coat is $285, Sue's will maximize economic profit by selling ________ coats a day.

Accepted Answer

A)  7 
B)  11 
C)  8 
D)  9 
A)  7 
B)  11 
C)  8 
D)  9

Exam 12: Perfect Competition

In perfect competition, the product of a single firm

-In the above figure, if the firm increases its output from Q2 to Q3, it will

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

-Based on the table above, what is the marginal revenue of the tenth unit of output?

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. In the long run, firms will ________ the market and the market ________ will ________.

In the long run, perfectly competitive firms cannot earn an economic profit.

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________.

-The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,000 for a ton of turnips, the firm is

When a firm is considered to be a "price taker" that means that the firm

The firm's supply curve is its

-The above figure shows the total revenue curve for Dizzy Discs. The demand curve for CDs sold by Dizzy Discs

-The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals $16 per unit,

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

-The table above shows the total cost incurred by Sue's Coat Shop, a perfectly competitive firm. If the market price of a coat is $285, Sue's will maximize economic profit by selling ________ coats a day.

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 above figure, if the firm increases its output from Q₂ to Q₃, it will

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. In the long run, firms will the market and the market will .

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will the market until all firms in the market are .