Question 1

​Table 14-16
The table represents the demand information for a firm in a competitive market.   ​
-Refer to Table 14-16. For this firm, the price is

Accepted Answer

A) ​$120 
B) ​$10 
C) ​$15 
D) ​$5 
A) ​$120 
B) ​$10 
C) ​$15 
D) ​$5

Question 2

The competitive firm's short-run supply curve is that portion of the

Accepted Answer

A) average variable cost curve that lies above marginal cost. 
B) average total cost curve that lies above marginal cost. 
C) marginal cost curve that lies above average variable cost. 
D) marginal cost curve that lies above average total cost. 
A) average variable cost curve that lies above marginal cost. 
B) average total cost curve that lies above marginal cost. 
C) marginal cost curve that lies above average variable cost. 
D) marginal cost curve that lies above average total cost.

Question 3

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A) ​Firms are price takers. 
B) ​Individual firms are price setters. 
C) ​Firms are able to sell all of the output that they choose to produce. 
D) ​Firms produce identical goods. 
A) ​Firms are price takers. 
B) ​Individual firms are price setters. 
C) ​Firms are able to sell all of the output that they choose to produce. 
D) ​Firms produce identical goods.

Question 4

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Accepted Answer

A) opportunity costs. 
B) fixed costs. 
C) variable costs. 
D) total costs. 
A) opportunity costs. 
B) fixed costs. 
C) variable costs. 
D) total costs.

Question 5

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i)
Marginal revenue equals $5.
(ii)
Average revenue equals $5.
(iii)
Price equals $5.

Accepted Answer

A) (i) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii) 
A) (i) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii)

Question 6

Figure 14-9
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.    
-Refer to Figure 14-9. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?

Accepted Answer

A) 300 
B) 6,000 
C) 30,000 
D) 60,000 
A) 300 
B) 6,000 
C) 30,000 
D) 60,000

Question 7

A firm has market power if it can

Accepted Answer

A) maximize profits. 
B) minimize costs. 
C) influence the market price of the good it sells. 
D) hire as many workers as it needs at the prevailing wage rate. 
A) maximize profits. 
B) minimize costs. 
C) influence the market price of the good it sells. 
D) hire as many workers as it needs at the prevailing wage rate.

Question 8

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs (fuel, flight attendants, etc.) amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should

Accepted Answer

A) drop the flight immediately. 
B) continue the flight. 
C) continue flying until the lease expires and then drop the run. 
D) drop the flight now but renew the lease if conditions improve. 
A) drop the flight immediately. 
B) continue the flight. 
C) continue flying until the lease expires and then drop the run. 
D) drop the flight now but renew the lease if conditions improve.

Question 9

When firms are neither entering nor exiting a perfectly competitive market,

Accepted Answer

A) total revenue must equal total variable cost for each firm. 
B) economic profits must be zero. 
C) price must equal average variable cost for each firm. 
D) Both a and c are correct. 
A) total revenue must equal total variable cost for each firm. 
B) economic profits must be zero. 
C) price must equal average variable cost for each firm. 
D) Both a and c are correct.

Question 10

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Accepted Answer

A) marginal revenue exceeds marginal cost. 
B) marginal cost exceeds marginal revenue. 
C) total cost exceeds total revenue. 
D) None of the above is correct. 
A) marginal revenue exceeds marginal cost. 
B) marginal cost exceeds marginal revenue. 
C) total cost exceeds total revenue. 
D) None of the above is correct.

Question 11

Table 14-11
Suppose that a firm in a competitive market faces the following prices and costs:  
-Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Accepted Answer

A) more units of output because its marginal revenue is greater than its marginal cost. 
B) fewer units of output because its marginal revenue is less than its marginal cost. 
C) more units of output because its marginal revenue is less than its marginal cost. 
D) fewer units of output because its marginal revenue is greater than its marginal cost. 
A) more units of output because its marginal revenue is greater than its marginal cost. 
B) fewer units of output because its marginal revenue is less than its marginal cost. 
C) more units of output because its marginal revenue is less than its marginal cost. 
D) fewer units of output because its marginal revenue is greater than its marginal cost.

Question 12

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

Accepted Answer

A) more firms will enter the market. 
B) some firms will exit from the market. 
C) the equilibrium price per unit will rise. 
D) average total costs will fall. 
A) more firms will enter the market. 
B) some firms will exit from the market. 
C) the equilibrium price per unit will rise. 
D) average total costs will fall.

Question 13

The marginal firm in a competitive market will earn zero economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 14

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

Accepted Answer

A) quantity = 5,000; price = $7. 
B) quantity = 35,000 price = $35,000. 
C) quantity = 1,000,000, price = $7. 
D) quantity = 1,000,000, price = $35,000. 
A) quantity = 5,000; price = $7. 
B) quantity = 35,000 price = $35,000. 
C) quantity = 1,000,000, price = $7. 
D) quantity = 1,000,000, price = $35,000.

Question 15

When marginal revenue equals marginal cost, the firm

Accepted Answer

A) should increase the level of production to maximize its profit. 
B) may be minimizing its losses rather than maximizing its profit. 
C) must be generating positive economic profits. 
D) must be generating positive accounting profits. 
A) should increase the level of production to maximize its profit. 
B) may be minimizing its losses rather than maximizing its profit. 
C) must be generating positive economic profits. 
D) must be generating positive accounting profits.

Question 16

A firm in a competitive market has the following cost structure:   If the market price is $8, how many units of output should the firm produce to maximize profit?

Accepted Answer

A) 5 units 
B) 6 units 
C) 7 units 
D) 8 units 
A) 5 units 
B) 6 units 
C) 7 units 
D) 8 units

Question 17

​All firms operating in a perfectly competitive market produce unique goods.

Accepted Answer

A) True 
 B)False

Question 18

When existing firms in a competitive market are profitable, an incentive exists for

Accepted Answer

A) new firms to seek government subsidies that would allow them to enter the market. 
B) new firms to enter the market, even without government subsidies. 
C) existing firms to raise prices. 
D) existing firms to increase production. 
A) new firms to seek government subsidies that would allow them to enter the market. 
B) new firms to enter the market, even without government subsidies. 
C) existing firms to raise prices. 
D) existing firms to increase production.

Question 19

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units

Question 20

Regardless of the cost structure of firms in a competitive market, in the long run

Accepted Answer

A) firms will experience rising demand for their products. 
B) the marginal firm will earn zero economic profit. 
C) firms will experience a less competitive market environment. 
D) exit and entry is likely to lead to a horizontal long-run supply curve. 
A) firms will experience rising demand for their products. 
B) the marginal firm will earn zero economic profit. 
C) firms will experience a less competitive market environment. 
D) exit and entry is likely to lead to a horizontal long-run supply curve.

Table 14-16 The table represents the demand information for a firm in a competitive market. -Refer to Table 14-16. For this firm, the price is

The competitive firm's short-run supply curve is that portion of the

Which of the following is not a characteristic of a perfectly competitive market?

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

A firm has market power if it can

When firms are neither entering nor exiting a perfectly competitive market,

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

The marginal firm in a competitive market will earn zero economic profit in the long run.

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

When marginal revenue equals marginal cost, the firm

A firm in a competitive market has the following cost structure: If the market price is $8, how many units of output should the firm produce to maximize profit?

All firms operating in a perfectly competitive market produce unique goods.

When existing firms in a competitive market are profitable, an incentive exists for

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Regardless of the cost structure of firms in a competitive market, in the long run

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 14: Firms in Competitive Markets

​Table 14-16 The table represents the demand information for a firm in a competitive market. ​ -Refer to Table 14-16. For this firm, the price is

The competitive firm's short-run supply curve is that portion of the

Which of the following is not a characteristic of a perfectly competitive market?

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

A firm has market power if it can

When firms are neither entering nor exiting a perfectly competitive market,

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

The marginal firm in a competitive market will earn zero economic profit in the long run.

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

When marginal revenue equals marginal cost, the firm

A firm in a competitive market has the following cost structure: If the market price is $8, how many units of output should the firm produce to maximize profit?

​All firms operating in a perfectly competitive market produce unique goods.

When existing firms in a competitive market are profitable, an incentive exists for

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Regardless of the cost structure of firms in a competitive market, in the long run

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Table 14-16 The table represents the demand information for a firm in a competitive market. -Refer to Table 14-16. For this firm, the price is

All firms operating in a perfectly competitive market produce unique goods.