Question 1

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:

Accepted Answer

A)  new firms will enter this market and the price will return to P0. 
B)  new firms will enter this market and the price will remain at P1. 
C)  some firms will exit this market and the price will return to P0. 
D)  some firms will exit this market and the price will remain at P1. 
A)  new firms will enter this market and the price will return to P0. 
B)  new firms will enter this market and the price will remain at P1. 
C)  some firms will exit this market and the price will return to P0. 
D)  some firms will exit this market and the price will remain at P1.

Question 2

Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at:

Accepted Answer

A)  Price = $25 and Quantity supplied = 125. 
B)  Price = $25 and Quantity supplied = 24,000. 
C)  Price = $1 and Quantity supplied = 125. 
D)  Price = $1 and Quantity supplied = 25,000. 
A)  Price = $25 and Quantity supplied = 125. 
B)  Price = $25 and Quantity supplied = 24,000. 
C)  Price = $1 and Quantity supplied = 125. 
D)  Price = $1 and Quantity supplied = 25,000.

Question 3

Many fast-food restaurants have begun offering value meals with fruit or salad instead of French fries. If consumers find this idea attractive, the market demand for potatoes will most likely:

Accepted Answer

A)  decrease, which may result in short-run losses for potato growers. 
B)  decrease but have no effect on the profits earned by potato growers in the short run. 
C)  increase, which may result in short-run losses for potato growers. 
D)  increase but have no effect on the profits earned by potato growers in the short run. 
A)  decrease, which may result in short-run losses for potato growers. 
B)  decrease but have no effect on the profits earned by potato growers in the short run. 
C)  increase, which may result in short-run losses for potato growers. 
D)  increase but have no effect on the profits earned by potato growers in the short run.

Question 4

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Accepted Answer

A)  firm shown in the graph will produce q0, but all of the firms in the market will produce a total of Q0. 
B)  firm shown in the graph will produce q1, but all of the firms in the market will produce a total of Q1. 
C)  output of the firm shown in the graph is the same as quantity supplied in the market. 
D)  firm is not producing where profit is maximized. 
A)  firm shown in the graph will produce q0, but all of the firms in the market will produce a total of Q0. 
B)  firm shown in the graph will produce q1, but all of the firms in the market will produce a total of Q1. 
C)  output of the firm shown in the graph is the same as quantity supplied in the market. 
D)  firm is not producing where profit is maximized.

Question 5

Refer to the graph shown. If the firm is producing 450 units of output, profit is equal to:

Accepted Answer

A)  $38. 
B)  −$30. 
C)  $0. 
D)  $30. 
A)  $38. 
B)  −$30. 
C)  $0. 
D)  $30.

Question 6

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce:

Accepted Answer

A)  40 units of output. 
B)  90 units of output. 
C)  110 units of output. 
D)  130 units of output. 
A)  40 units of output. 
B)  90 units of output. 
C)  110 units of output. 
D)  130 units of output.

Question 7

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Accepted Answer

A)  more than total cost, and so profit will increase. 
B)  more than total cost, and so profit will decrease. 
C)  less than total cost, and so profit will increase. 
D)  less than total cost, and so profit will decrease. 
A)  more than total cost, and so profit will increase. 
B)  more than total cost, and so profit will decrease. 
C)  less than total cost, and so profit will increase. 
D)  less than total cost, and so profit will decrease.

Question 8

An increase in market price, given a fixed number of firms, causes market supply to shift to the right.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the graph shown. Assuming that the industry continues to operate under conditions of perfect competition and that the cost curves do not shift, in the long run this firm will produce:

Accepted Answer

A)  800 units of output. 
B)  1,000 units of output. 
C)  1,200 units of output. 
D)  1,400 units of output. 
A)  800 units of output. 
B)  1,000 units of output. 
C)  1,200 units of output. 
D)  1,400 units of output.

Question 10

A firm will continue to operate in the long run as long as price exceeds long-run average variable cost.

Accepted Answer

A) True 
 B)False

Question 11

During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is:

Accepted Answer

A)  a shift of the demand curve to the left. 
B)  a shift of the supply curve to the left. 
C)  a shift of the supply curve to the right. 
D)  a shift of the demand curve to the right. 
A)  a shift of the demand curve to the left. 
B)  a shift of the supply curve to the left. 
C)  a shift of the supply curve to the right. 
D)  a shift of the demand curve to the right.

Question 12

Refer to the graph shown depicting a perfectly competitive firm. If average variable cost is $3 at quantity 450, points A through E represent the:

Accepted Answer

A)  firm's total cost curve. 
B)  firm's total revenue curve. 
C)  demand for the firm's product. 
D)  firm's supply curve. 
A)  firm's total cost curve. 
B)  firm's total revenue curve. 
C)  demand for the firm's product. 
D)  firm's supply curve.

Question 13

Refer to the table shown. The maximum profit that the perfectly competitive firm represented by the above data could earn is: $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Tatal Cast } & \text { Tatal Revenue } \
\hline 10 & \$ 25 & 50 \
\hline 20 & 60 & 100 \
\hline 30 & 105 & 150 \
\hline 40 & 160 & 200 \
\hline
\end{array}$$

Accepted Answer

A)  $25. 
B)  $35. 
C)  $45. 
D)  $55. 
A)  $25. 
B)  $35. 
C)  $45. 
D)  $55.

Question 14

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

Accepted Answer

A)  $38. 
B)  −$38. 
C)  $0. 
D)  $30. 
A)  $38. 
B)  −$38. 
C)  $0. 
D)  $30.

Question 15

In a perfectly competitive constant-cost industry:

Accepted Answer

A)  factor prices do not change as industry output increases. 
B)  factor prices rise as industry output increases. 
C)  factor prices fall as industry output increases. 
D)  there is no way to predict what will happen to factor prices as industry output increases. 
A)  factor prices do not change as industry output increases. 
B)  factor prices rise as industry output increases. 
C)  factor prices fall as industry output increases. 
D)  there is no way to predict what will happen to factor prices as industry output increases.

Question 16

A perfectly competitive firm in the long run:

Accepted Answer

A)  can earn positive or negative economic profits. 
B)  can earn negative accounting profits as long as economic profits are positive. 
C)  makes zero economic profits. 
D)  makes zero accounting profits. 
A)  can earn positive or negative economic profits. 
B)  can earn negative accounting profits as long as economic profits are positive. 
C)  makes zero economic profits. 
D)  makes zero accounting profits.

Question 17

An increase in the number of firms in a perfectly competitive market causes:

Accepted Answer

A)  a movement along the market supply curve. 
B)  an increase in each firm's supply curve. 
C)  an increase in the market supply curve. 
D)  a decrease in the market supply curve. 
A)  a movement along the market supply curve. 
B)  an increase in each firm's supply curve. 
C)  an increase in the market supply curve. 
D)  a decrease in the market supply curve.

Question 18

Barriers to entry:

Accepted Answer

A)  do not affect the number of firms in an industry. 
B)  exist only in perfectly competitive markets. 
C)  restrict the number of firms in an industry. 
D)  limit output in an industry. 
A)  do not affect the number of firms in an industry. 
B)  exist only in perfectly competitive markets. 
C)  restrict the number of firms in an industry. 
D)  limit output in an industry.

Question 19

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D0 to D1, in the long run:

Accepted Answer

A)  new firms will enter this market and price will return to P0. 
B)  new firms will enter this market and price will remain at P1. 
C)  some firms will exit this market and price will return to P0. 
D)  some firms will exit this market and price will remain at P1. 
A)  new firms will enter this market and price will return to P0. 
B)  new firms will enter this market and price will remain at P1. 
C)  some firms will exit this market and price will return to P0. 
D)  some firms will exit this market and price will remain at P1.

Question 20

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, the firm will:

Accepted Answer

A)  lower the price it charges. 
B)  earn negative economic profit in the short run. 
C)  earn positive economic profit in the short run. 
D)  earn positive economic profit in the long run. 
A)  lower the price it charges. 
B)  earn negative economic profit in the short run. 
C)  earn positive economic profit in the short run. 
D)  earn positive economic profit in the long run.

Exam 13: Perfect Competition

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:

Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at:

Many fast-food restaurants have begun offering value meals with fruit or salad instead of French fries. If consumers find this idea attractive, the market demand for potatoes will most likely:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Refer to the graph shown. If the firm is producing 450 units of output, profit is equal to:

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce:

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

An increase in market price, given a fixed number of firms, causes market supply to shift to the right.

Refer to the graph shown. Assuming that the industry continues to operate under conditions of perfect competition and that the cost curves do not shift, in the long run this firm will produce:

A firm will continue to operate in the long run as long as price exceeds long-run average variable cost.

During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is:

Refer to the graph shown depicting a perfectly competitive firm. If average variable cost is $3 at quantity 450, points A through E represent the:

Refer to the table shown. The maximum profit that the perfectly competitive firm represented by the above data could earn is: Quantity Tatal Cast Tatal Revenue 10 \ 25 50 20 60 100 30 105 150 40 160 200

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

In a perfectly competitive constant-cost industry:

A perfectly competitive firm in the long run:

An increase in the number of firms in a perfectly competitive market causes:

Barriers to entry:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D0 to D1, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, the firm will:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D₀ to D₁, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, the firm will: