Question 1

Use the figure to answer the following question(s).
Figure 9-9  
-If the market price in Figure 9-9 increases to $60, what should the firm do?

Accepted Answer

A)  produce 10 per day 
B)  produce 15 per day 
C)  produce 20 per day 
D)  increase its price to $70 
A)  produce 10 per day 
B)  produce 15 per day 
C)  produce 20 per day 
D)  increase its price to $70

Question 2

A union representing a group of workers will tend to be stronger when

Accepted Answer

A)  there are no good substitutes for the labor services of the unionized workers. 
B)  the domestic producers of the good produced by the unionized workers face intense competition from foreign suppliers of the good. 
C)  the cost of employing the unionized workers is a large part of the total cost of the product that they produce. 
D)  the demand for the good produced by the unionized workers is highly elastic. 
A)  there are no good substitutes for the labor services of the unionized workers. 
B)  the domestic producers of the good produced by the unionized workers face intense competition from foreign suppliers of the good. 
C)  the cost of employing the unionized workers is a large part of the total cost of the product that they produce. 
D)  the demand for the good produced by the unionized workers is highly elastic.

Question 3

A competitive price-taker market in long-run equilibrium is described as efficient because firms

Accepted Answer

A)  produce at the low point on their average cost curve. 
B)  produce where marginal cost yields a profit. 
C)  earn no more than the cost of capital. 
D)  are not profitable. 
A)  produce at the low point on their average cost curve. 
B)  produce where marginal cost yields a profit. 
C)  earn no more than the cost of capital. 
D)  are not profitable.

Question 4

Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes their costs. Is he correct? Is there significance to this observation?

Accepted Answer

Tom is right, but he is forgetting the f

Question 5

Figure 9-1  
-Figure 9-1 shows the marginal and average total cost curves for a firm producing product A. What would be the minimum price this firm could charge and still continue to supply A to the market in the long run?

Accepted Answer

A)  $4 
B)  $5 
C)  $6 
D)  $8 
A)  $4 
B)  $5 
C)  $6 
D)  $8

Question 6

Suppose product price is $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this competitive price-taker firm to do?

Accepted Answer

A)  Increase output. 
B)  Decrease output. 
C)  Shut down operations. 
D)  Stay at the current output; the firm is earning a profit of $400. 
E)  Stay at the current output even though the firm is losing $200. 
A)  Increase output. 
B)  Decrease output. 
C)  Shut down operations. 
D)  Stay at the current output; the firm is earning a profit of $400. 
E)  Stay at the current output even though the firm is losing $200.

Question 7

Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.

Accepted Answer

A profit-maximizing, price-taker firm al

Question 8

If a single firm in a price-taker market lowers its price below the market equilibrium price,

Accepted Answer

A)  it will get a larger share of the market. 
B)  it will lose revenue without increasing the quantity it can sell. 
C)  other firms will lower their prices. 
D)  other firms will be driven out of the industry. 
A)  it will get a larger share of the market. 
B)  it will lose revenue without increasing the quantity it can sell. 
C)  other firms will lower their prices. 
D)  other firms will be driven out of the industry.

Question 9

If marginal revenue exceeds marginal cost, a price-taker firm should

Accepted Answer

A)  expand output. 
B)  reduce output. 
C)  lower its price. 
D)  do both a and c. 
A)  expand output. 
B)  reduce output. 
C)  lower its price. 
D)  do both a and c.

Question 10

Which of the following is true for a constant cost industry?

Accepted Answer

A)  The total cost of producing 500 units will be the same as the total cost of producing 250 units. 
B)  If 100 units can be produced for $500, then 200 units can be produced for $1,000. 
C)  The demand curve and, therefore, the unit price in the industry are constant. 
D)  Firms in the industry will hold output constant if the price of the product increases. 
A)  The total cost of producing 500 units will be the same as the total cost of producing 250 units. 
B)  If 100 units can be produced for $500, then 200 units can be produced for $1,000. 
C)  The demand curve and, therefore, the unit price in the industry are constant. 
D)  Firms in the industry will hold output constant if the price of the product increases.

Question 11

Within the framework of the price-taker model, a price taker will always produce a quantity of output that

Accepted Answer

A)  minimizes the per-unit cost of production. 
B)  is expected to provide the largest possible total revenue. 
C)  maximizes total revenue minus total cost. 
D)  brings average total cost and price into equality. 
A)  minimizes the per-unit cost of production. 
B)  is expected to provide the largest possible total revenue. 
C)  maximizes total revenue minus total cost. 
D)  brings average total cost and price into equality.

Question 12

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

Accepted Answer

A)  Retail trades. 
B)  The hotel and restaurant industry. 
C)  The government sector. 
D)  Automobile manufacturing. 
A)  Retail trades. 
B)  The hotel and restaurant industry. 
C)  The government sector. 
D)  Automobile manufacturing.

Question 13

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, it should

Accepted Answer

A)  raise its prices during the winter months. 
B)  lower its prices during the summer months. 
C)  operate during the summer but shut down during the winter months. 
D)  operate during all months of the year as long as its profits during the summer exceed its losses during the winter. 
A)  raise its prices during the winter months. 
B)  lower its prices during the summer months. 
C)  operate during the summer but shut down during the winter months. 
D)  operate during all months of the year as long as its profits during the summer exceed its losses during the winter.

Question 14

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

Accepted Answer

A)  New York 
B)  Arkansas 
C)  North Carolina 
D)  California 
A)  New York 
B)  Arkansas 
C)  North Carolina 
D)  California

Question 15

Use the figure to answer the following question(s).
Figure 9-8  
-If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.

Accepted Answer

A)  output, 15; total revenue, $45 
B)  output, 15; total revenue, $60 
C)  output, 17; total revenue, $68 (approx.) 
D)  output, 20; total revenue, $80 
A)  output, 15; total revenue, $45 
B)  output, 15; total revenue, $60 
C)  output, 17; total revenue, $68 (approx.) 
D)  output, 20; total revenue, $80

Question 16

Use the figure to answer the following question(s).
Figure 9-7  
-If the market price in Figure 9-7 increases to $4, what should the firm do?

Accepted Answer

A)  produce 5,000 per week 
B)  produce 7,500 per week 
C)  produce 10,000 per week 
D)  increase its price to $5 
A)  produce 5,000 per week 
B)  produce 7,500 per week 
C)  produce 10,000 per week 
D)  increase its price to $5

Question 17

Since 1970, union membership, as a percent of the labor force,

Accepted Answer

A)  has remained virtually unchanged. 
B)  has increased, as more government workers have decided to unionize. 
C)  has decreased. 
D)  has gone through wild swings both up and down. 
A)  has remained virtually unchanged. 
B)  has increased, as more government workers have decided to unionize. 
C)  has decreased. 
D)  has gone through wild swings both up and down.

Question 18

Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q = 1,000, the firm's profit amounts to

Accepted Answer

A)  −$200. 
B)  $1,000. 
C)  $3,000. 
D)  $4,000. 
A)  −$200. 
B)  $1,000. 
C)  $3,000. 
D)  $4,000.

Question 19

Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?

Accepted Answer

A)  An elastic demand for the goods produced by union labor. 
B)  A five-year apprenticeship before one can qualify for jobs held by union members. 
C)  High tariffs on goods produced by the union labor. 
D)  Favoritism in the allocation of government contracts to firms that employ union labor. 
A)  An elastic demand for the goods produced by union labor. 
B)  A five-year apprenticeship before one can qualify for jobs held by union members. 
C)  High tariffs on goods produced by the union labor. 
D)  Favoritism in the allocation of government contracts to firms that employ union labor.

Question 20

Which of the following will limit the ability of a union to push the wages of its members much above competitive levels?

Accepted Answer

A)  The presence of nonunion firms that produce the same product as the unionized labor. 
B)  Foreign competition in the market for the product produced by the unionized labor. 
C)  A highly elastic demand for the product supplied by the unionized labor. 
D)  All of the above. 
A)  The presence of nonunion firms that produce the same product as the unionized labor. 
B)  Foreign competition in the market for the product produced by the unionized labor. 
C)  A highly elastic demand for the product supplied by the unionized labor. 
D)  All of the above.

Use the figure to answer the following question(s). Figure 9-9 -If the market price in Figure 9-9 increases to $60, what should the firm do?

A union representing a group of workers will tend to be stronger when

A competitive price-taker market in long-run equilibrium is described as efficient because firms

Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes their costs. Is he correct? Is there significance to this observation?

Figure 9-1 -Figure 9-1 shows the marginal and average total cost curves for a firm producing product A. What would be the minimum price this firm could charge and still continue to supply A to the market in the long run?

Suppose product price is $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this competitive price-taker firm to do?

Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.

If a single firm in a price-taker market lowers its price below the market equilibrium price,

If marginal revenue exceeds marginal cost, a price-taker firm should

Which of the following is true for a constant cost industry?

Within the framework of the price-taker model, a price taker will always produce a quantity of output that

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, it should

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

Use the figure to answer the following question(s). Figure 9-8 -If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.

Use the figure to answer the following question(s). Figure 9-7 -If the market price in Figure 9-7 increases to $4, what should the firm do?

Since 1970, union membership, as a percent of the labor force,

Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q = 1,000, the firm's profit amounts to

Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?

Which of the following will limit the ability of a union to push the wages of its members much above competitive levels?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 9: Price Takers and the Competitive Process

Use the figure to answer the following question(s). Figure 9-9 -If the market price in Figure 9-9 increases to $60, what should the firm do?

A union representing a group of workers will tend to be stronger when

A competitive price-taker market in long-run equilibrium is described as efficient because firms

Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes their costs. Is he correct? Is there significance to this observation?

Figure 9-1 -Figure 9-1 shows the marginal and average total cost curves for a firm producing product A. What would be the minimum price this firm could charge and still continue to supply A to the market in the long run?

Suppose product price is $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this competitive price-taker firm to do?

Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.

If a single firm in a price-taker market lowers its price below the market equilibrium price,

If marginal revenue exceeds marginal cost, a price-taker firm should

Which of the following is true for a constant cost industry?

Within the framework of the price-taker model, a price taker will always produce a quantity of output that

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, it should

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

Use the figure to answer the following question(s). Figure 9-8 -If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.

Use the figure to answer the following question(s). Figure 9-7 -If the market price in Figure 9-7 increases to $4, what should the firm do?

Since 1970, union membership, as a percent of the labor force,

Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q = 1,000, the firm's profit amounts to

Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?

Which of the following will limit the ability of a union to push the wages of its members much above competitive levels?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters