Question 1

A perfectly competitive firm has a total revenue curve that is

Accepted Answer

A)  upward sloping with an increasing slope. 
B)  downward sloping with a constant slope. 
C)  upward sloping with a decreasing slope. 
D)  upward sloping with a constant slope. 
A)  upward sloping with an increasing slope. 
B)  downward sloping with a constant slope. 
C)  upward sloping with a decreasing slope. 
D)  upward sloping with a constant slope.

Question 2

-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 shut-down price?

Accepted Answer

A)  $6 per sandwich 
B)  $4 per sandwich 
C)  $3 per sandwich 
D)  $5 per sandwich 
A)  $6 per sandwich 
B)  $4 per sandwich 
C)  $3 per sandwich 
D)  $5 per sandwich

Question 3

-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce?

Accepted Answer

A)  8 
B)  9 
C)  10 
D)  more than 10 
A)  8 
B)  9 
C)  10 
D)  more than 10

Question 4

-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 profit-maximizing level of output for Sue's Sea Shells by the Sea Shore is

Accepted Answer

A)  202 dozen sea shells by the sea shore per day. 
B)  204 dozen sea shells by the sea shore per day. 
C)  205 dozen sea shells by the sea shore per day. 
D)  206 dozen sea shells by the sea shore per day. 
A)  202 dozen sea shells by the sea shore per day. 
B)  204 dozen sea shells by the sea shore per day. 
C)  205 dozen sea shells by the sea shore per day. 
D)  206 dozen sea shells by the sea shore per day.

Question 5

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its

Accepted Answer

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

Question 6

-In the above figure, if the firm increases its output from Q1 to Q2, 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 7

In a perfectly competitive market, a permanent decrease in demand initially brings a lower price, economic

Accepted Answer

A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market. 
A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market.

Question 8

Because each perfectly competitive firm sells a product identical to that of the other firms,

Accepted Answer

A)  each firm tries to cut prices to increase its market share. 
B)  each firm's output is a perfect substitute for the output of any other firm. 
C)  each firm expects to earn some economic profit. 
D)  the demand for each firm's product is perfectly inelastic. 
A)  each firm tries to cut prices to increase its market share. 
B)  each firm's output is a perfect substitute for the output of any other firm. 
C)  each firm expects to earn some economic profit. 
D)  the demand for each firm's product is perfectly inelastic.

Question 9

Describe how economic losses are eliminated in a perfectly competitive industry.

Accepted Answer

If firms are incurring economic losses,

Question 10

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

Accepted Answer

A)  zero 
B)  $2.50 per hour 
C)  $12.50 per hour 
D)  -$10.00 per hour 
A)  zero 
B)  $2.50 per hour 
C)  $12.50 per hour 
D)  -$10.00 per hour

Question 11

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Accepted Answer

A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms 
A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms

Question 12

A perfectly competitive firm's supply curve

Accepted Answer

A)  shows the relationship between the price and the quantity the firm will produce. 
B)  is the portion of the marginal cost curve above the average variable cost curve. 
C)  is upward sloping. 
D)  All of the above are correct. 
A)  shows the relationship between the price and the quantity the firm will produce. 
B)  is the portion of the marginal cost curve above the average variable cost curve. 
C)  is upward sloping. 
D)  All of the above are correct.

Question 13

-The first table shows the market demand schedule for CDs, and the second table shows the cost structure of each firm. The CD market is perfectly competitive and there are 100 identical firms. The market price of a CD is ________, and ________ CDs are produced and sold.

Accepted Answer

A)  $9.00; 20,000 
B)  $9.50; 15,000 
C)  $10.00; 10,000 
D)  $8.50; 24,000 
A)  $9.00; 20,000 
B)  $9.50; 15,000 
C)  $10.00; 10,000 
D)  $8.50; 24,000

Question 14

-In the above figure, the firm will produce

Accepted Answer

A)  0 units. 
B)  5 units. 
C)  15 units 
D)  20 units. 
A)  0 units. 
B)  5 units. 
C)  15 units 
D)  20 units.

Question 15

In perfect competition, ________.

Accepted Answer

A)  there are restrictions on entry into the market 
B)  firms in the market have advantages over firms that plan to enter the market 
C)  only firms know their competitors' prices 
D)  there are many firms that sell identical products 
A)  there are restrictions on entry into the market 
B)  firms in the market have advantages over firms that plan to enter the market 
C)  only firms know their competitors' prices 
D)  there are many firms that sell identical products

Question 16

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is

Accepted Answer

A)  $1,200. 
B)  less than $1,200 but more than zero. 
C)  more than $1,200. 
D)  zero. 
A)  $1,200. 
B)  less than $1,200 but more than zero. 
C)  more than $1,200. 
D)  zero.

Question 17

In perfect competition, each individual firm faces ________ demand curve.

Accepted Answer

A)  an inelastic 
B)  an upward sloping 
C)  a perfectly elastic 
D)  a downward sloping 
A)  an inelastic 
B)  an upward sloping 
C)  a perfectly elastic 
D)  a downward sloping

Question 18

-In the above table, the average variable cost at 2 units of output is

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80. 
A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80.

Question 19

-If the price is $12 per pizza, the perfectly competitive firm in the above figure is

Accepted Answer

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

Question 20

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

Accepted Answer

There are thousands upon thousands of ho

Exam 12: Perfect Competition

A perfectly competitive firm has a total revenue curve that is

-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 shut-down price?

-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce?

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its

-In the above figure, if the firm increases its output from Q1 to Q2, it will

In a perfectly competitive market, a permanent decrease in demand initially brings a lower price, economic

Because each perfectly competitive firm sells a product identical to that of the other firms,

Describe how economic losses are eliminated in a perfectly competitive industry.

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

A perfectly competitive firm's supply curve

-The first table shows the market demand schedule for CDs, and the second table shows the cost structure of each firm. The CD market is perfectly competitive and there are 100 identical firms. The market price of a CD is ________, and ________ CDs are produced and sold.

-In the above figure, the firm will produce

In perfect competition, ________.

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is

In perfect competition, each individual firm faces ________ demand curve.

-In the above table, the average variable cost at 2 units of output is

-If the price is $12 per pizza, the perfectly competitive firm in the above figure is

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

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 Q₁ to Q₂, it will

-The first table shows the market demand schedule for CDs, and the second table shows the cost structure of each firm. The CD market is perfectly competitive and there are 100 identical firms. The market price of a CD is , and CDs are produced and sold.