Question 1

The most profitable output level can be found by looking at which two curves?

Accepted Answer

A)  P and MR. 
B)  MR and MC. 
C)  MC and TC. 
D)  P and AVC. 
E)  AVC and ATC. 
A)  P and MR. 
B)  MR and MC. 
C)  MC and TC. 
D)  P and AVC. 
E)  AVC and ATC.

Question 2

In long-run equilibrium for a perfectly competitive firm, price equals which of the following?

Accepted Answer

A)  Economies of scale. 
B)  Minimum short-run average total cost. 
C)  The sum of each short-run marginal cost curve. 
D)  All of these. 
A)  Economies of scale. 
B)  Minimum short-run average total cost. 
C)  The sum of each short-run marginal cost curve. 
D)  All of these.

Question 3

Exhibit 8-3 Cost per unit curves  
-As shown in Exhibit 8-3, if the product price is either $1.00, $1.50, $2.00, or $4.00, the firm's economic profit is maximum at an output of:

Accepted Answer

A)  5 units per day. 
B)  10 units per day. 
C)  15 units per day. 
D)  20 units per day. 
A)  5 units per day. 
B)  10 units per day. 
C)  15 units per day. 
D)  20 units per day.

Question 4

Exhibit 8-12 Marginal revenue and cost per unit curves  
-The firm shown in Exhibit 8-12 will:

Accepted Answer

A)  produce where marginal cost equals marginal revenue. 
B)  be a price taker. 
C)  not produce below a price of OA. 
D)  all of these. 
A)  produce where marginal cost equals marginal revenue. 
B)  be a price taker. 
C)  not produce below a price of OA. 
D)  all of these.

Question 5

If marginal revenue exceeds marginal cost in the short run, total revenue for the perfectly competitive firm is greater than total cost.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 8-13 Price and cost per unit curves  
-In Exhibit 8-13, if the price is P3, total economic profit is maximized or economic loss minimized at the output:

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
E)  Q5. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
E)  Q5.

Question 7

Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line. ​

Accepted Answer

A) True 
 B)False

Question 8

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

Accepted Answer

A)  make an economic profit. 
B)  go out of business. 
C)  expand to a bigger operation. 
D)  continue to be shut down. 
E)  break even. 
A)  make an economic profit. 
B)  go out of business. 
C)  expand to a bigger operation. 
D)  continue to be shut down. 
E)  break even.

Question 9

In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.

Accepted Answer

A) True 
 B)False

Question 10

A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:

Accepted Answer

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

Question 11

Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

Accepted Answer

A)  100. 
B)  1,000. 
C)  10,000. 
D)  18,000. 
A)  100. 
B)  1,000. 
C)  10,000. 
D)  18,000.

Question 12

Exhibit 8-12 Marginal revenue and cost per unit curves  
-As shown in Exhibit 8-12, if the price is OD, the firm's total revenue at its most profitable level of output is:

Accepted Answer

A)  OZID. 
B)  OYHD. 
C)  OXLD. 
D)  OYFB. 
A)  OZID. 
B)  OYHD. 
C)  OXLD. 
D)  OYFB.

Question 13

The price-taker firm should discontinue production immediately if:

Accepted Answer

A)  the market price exceeds the firm's average total costs. 
B)  the market price is less than the firm's average variable costs. 
C)  the market price is less than the firm's average total costs, but greater than its average variable cost. 
D)  its accounting statement indicates that it is suffering losses. 
A)  the market price exceeds the firm's average total costs. 
B)  the market price is less than the firm's average variable costs. 
C)  the market price is less than the firm's average total costs, but greater than its average variable cost. 
D)  its accounting statement indicates that it is suffering losses.

Question 14

In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

In the short run, a firm should shut down if its economic loss from operating exceeds its total fixed cost.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 8-10 Price and cost data for a firm $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Q } & \text { P } & \text { AVC } & \text { ATC } & \text { MC } \
\hline 0 & \$ 12 & - & - & - \
1 & 12 & 3 & 5 & 5 \
2 & 12 & 5 & 6 & 7 \
3 & 12 & 7.3 & 8 & 12 \
4 & 12 & 9.5 & 10 & 16 \
\hline
\end{array}$$
-In Exhibit 8-10, the maximum possible total profit is:

Accepted Answer

A)  $36. 
B)  $24. 
C)  $20. 
D)  $12. 
E)  $8. 
A)  $36. 
B)  $24. 
C)  $20. 
D)  $12. 
E)  $8.

Question 17

Exhibit 8-2 Total revenue and total cost graph  
-At an output of 250 units, as shown in Exhibit 8-2, marginal cost is:

Accepted Answer

A)  greater than marginal revenue. 
B)  equal to marginal revenue. 
C)  less than marginal revenue. 
D)  none of these. 
A)  greater than marginal revenue. 
B)  equal to marginal revenue. 
C)  less than marginal revenue. 
D)  none of these.

Question 18

If a perfectly competitive industry's long-run supply curve is downward sloping, we can conclude that input prices will:

Accepted Answer

A)  increase as industry output increases. 
B)  decrease as industry output increases. 
C)  remain constant as industry output increases. 
D)  none of these conclusions can be drawn. 
A)  increase as industry output increases. 
B)  decrease as industry output increases. 
C)  remain constant as industry output increases. 
D)  none of these conclusions can be drawn.

Question 19

The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.

Accepted Answer

A) True 
 B)False

Question 20

A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500. From this, she can determine:

Accepted Answer

A)  her profits are not being maximized. 
B)  she has earned zero economic profits. 
C)  she has earned economic profits of $1,000. 
D)  she has earned economic profits of $1,500. 
E)  she should sell fewer sandwiches. 
A)  her profits are not being maximized. 
B)  she has earned zero economic profits. 
C)  she has earned economic profits of $1,000. 
D)  she has earned economic profits of $1,500. 
E)  she should sell fewer sandwiches.

The most profitable output level can be found by looking at which two curves?

In long-run equilibrium for a perfectly competitive firm, price equals which of the following?

Exhibit 8-3 Cost per unit curves -As shown in Exhibit 8-3, if the product price is either $1.00, $1.50, $2.00, or $4.00, the firm's economic profit is maximum at an output of:

Exhibit 8-12 Marginal revenue and cost per unit curves -The firm shown in Exhibit 8-12 will:

If marginal revenue exceeds marginal cost in the short run, total revenue for the perfectly competitive firm is greater than total cost.

Exhibit 8-13 Price and cost per unit curves -In Exhibit 8-13, if the price is P₃, total economic profit is maximized or economic loss minimized at the output:

Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line.

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.

A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:

Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

Exhibit 8-12 Marginal revenue and cost per unit curves -As shown in Exhibit 8-12, if the price is OD, the firm's total revenue at its most profitable level of output is:

The price-taker firm should discontinue production immediately if:

In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

In the short run, a firm should shut down if its economic loss from operating exceeds its total fixed cost.

Exhibit 8-10 Price and cost data for a firm Q P AVC ATC MC 0 \ 12 - - - 1 12 3 5 5 2 12 5 6 7 3 12 7.3 8 12 4 12 9.5 10 16 -In Exhibit 8-10, the maximum possible total profit is:

Exhibit 8-2 Total revenue and total cost graph -At an output of 250 units, as shown in Exhibit 8-2, marginal cost is:

If a perfectly competitive industry's long-run supply curve is downward sloping, we can conclude that input prices will:

The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.

A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500. From this, she can determine:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 8: Perfect Competition

The most profitable output level can be found by looking at which two curves?

In long-run equilibrium for a perfectly competitive firm, price equals which of the following?

Exhibit 8-3 Cost per unit curves -As shown in Exhibit 8-3, if the product price is either $1.00, $1.50, $2.00, or $4.00, the firm's economic profit is maximum at an output of:

Exhibit 8-12 Marginal revenue and cost per unit curves -The firm shown in Exhibit 8-12 will:

If marginal revenue exceeds marginal cost in the short run, total revenue for the perfectly competitive firm is greater than total cost.

Exhibit 8-13 Price and cost per unit curves -In Exhibit 8-13, if the price is P3, total economic profit is maximized or economic loss minimized at the output:

Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line. ​

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.

A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:

Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

Exhibit 8-12 Marginal revenue and cost per unit curves -As shown in Exhibit 8-12, if the price is OD, the firm's total revenue at its most profitable level of output is:

The price-taker firm should discontinue production immediately if:

In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

In the short run, a firm should shut down if its economic loss from operating exceeds its total fixed cost.

Exhibit 8-10 Price and cost data for a firm Q P AVC ATC MC 0 \ 12 - - - 1 12 3 5 5 2 12 5 6 7 3 12 7.3 8 12 4 12 9.5 10 16 -In Exhibit 8-10, the maximum possible total profit is:

Exhibit 8-2 Total revenue and total cost graph -At an output of 250 units, as shown in Exhibit 8-2, marginal cost is:

If a perfectly competitive industry's long-run supply curve is downward sloping, we can conclude that input prices will:

The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.

A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500. From this, she can determine:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 8-13 Price and cost per unit curves -In Exhibit 8-13, if the price is P₃, total economic profit is maximized or economic loss minimized at the output:

Since a firm in perfect competition is a price taker, the demand curve for the firm's product is a horizontal line.