Question 1

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the

Accepted Answer

A) production of the 100th unit of output increases the firm's profit by $1. 
B) production of the 100th unit of output increases the firm's average total cost by $1. 
C) firm's profit-maximizing level of output is less than 100 units. 
D) production of the 101st unit of output must increase the firm's profit by more than $1. 
A) production of the 100th unit of output increases the firm's profit by $1. 
B) production of the 100th unit of output increases the firm's average total cost by $1. 
C) firm's profit-maximizing level of output is less than 100 units. 
D) production of the 101st unit of output must increase the firm's profit by more than $1.

Question 2

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry.  
-Refer to Table 14-6. What is the average revenue when 4 units are sold?

Accepted Answer

A) $60 
B) $120 
C) $125 
D) $197 
A) $60 
B) $120 
C) $125 
D) $197

Question 3

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Accepted Answer

A) the long-run market supply curve must be horizontal. 
B) the long-run market supply curve must be upward-sloping. 
C) the long-run market supply curve must be downward-sloping. 
D) we do not have sufficient information to determine the shape of the long-run market supply curve. 
A) the long-run market supply curve must be horizontal. 
B) the long-run market supply curve must be upward-sloping. 
C) the long-run market supply curve must be downward-sloping. 
D) we do not have sufficient information to determine the shape of the long-run market supply curve.

Question 4

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:  
-Refer to Figure 14-1. If the market price is $5.00, the firm will earn

Accepted Answer

A) positive economic profits in the short run. 
B) negative economic profits in the short run but remain in business. 
C) negative economic profits and shut down. 
D) zero economic profits in the short run. 
A) positive economic profits in the short run. 
B) negative economic profits in the short run but remain in business. 
C) negative economic profits and shut down. 
D) zero economic profits in the short run.

Question 5

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:  
-Refer to Figure 14-3. If the market price is $6, what is the firm's short-run economic profit?

Accepted Answer

A) $0 
B) $12 
C) $15 
D) $18 
A) $0 
B) $12 
C) $15 
D) $18

Question 6

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

Accepted Answer

A) $4 
B) $8 
C) $32 
D) $64 
A) $4 
B) $8 
C) $32 
D) $64

Question 7

Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 8

Table 14-15  
-Refer to Table 14-15. What is the lowest price at which this firm would operate in the short run?

Accepted Answer

A) $3. 
B) $4. 
C) $5. 
D) $6. 
A) $3. 
B) $4. 
C) $5. 
D) $6.

Question 9

Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per unit.
• When the firm produces and sells 150 units of output, its average total cost is $24.50.
• When the firm produces and sells 151 units of output, its average total cost is $24.55.
-Refer to Scenario 14-4. How does the firm's marginal revenue (MR) compare to its marginal cost (MC) when it increases its output from 150 units to 151 units?

Accepted Answer

A) MR exceeds MC by $7.95. 
B) MR exceeds MC by $11.05. 
C) MC exceeds MR by $11.05. 
D) MC exceeds MR by $13.50. 
A) MR exceeds MC by $7.95. 
B) MR exceeds MC by $11.05. 
C) MC exceeds MR by $11.05. 
D) MC exceeds MR by $13.50.

Question 10

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

Accepted Answer

A) True 
 B)False

Question 11

In the long-run equilibrium of a market with free entry and exit, if all firms have the same cost structure, then

Accepted Answer

A) marginal cost exceeds average total cost. 
B) the price of the good exceeds average total cost. 
C) average total cost exceeds the price of the good. 
D) firms are operating at their efficient scale. 
A) marginal cost exceeds average total cost. 
B) the price of the good exceeds average total cost. 
C) average total cost exceeds the price of the good. 
D) firms are operating at their efficient scale.

Question 12

In a shopping mall in a large city, the Rudolph the Reindeer store sells only merchandise for the Christmas holiday season. Most of the store's revenue and profit are attributable to the months of October, November, and December. However, the store is open throughout the year. If the owner of the store is rational, what criterion does he or she use in deciding to keep the store open year-round?

Accepted Answer

The owner has determined that

Question 13

A competitive firm's short-run supply curve is part of which of the following curves?

Accepted Answer

A) marginal revenue 
B) average variable cost 
C) average total cost 
D) marginal cost 
A) marginal revenue 
B) average variable cost 
C) average total cost 
D) marginal cost

Question 14

Which of the following expressions is correct for a competitive firm?

Accepted Answer

A) profit = (quantity of output) x (price - average total cost) 
B) marginal revenue = (change in total revenue)/(quantity of output) 
C) average total cost = total variable cost/quantity of output 
D) average revenue = (marginal revenue) x (quantity of output) 
A) profit = (quantity of output) x (price - average total cost) 
B) marginal revenue = (change in total revenue)/(quantity of output) 
C) average total cost = total variable cost/quantity of output 
D) average revenue = (marginal revenue) x (quantity of output)

Question 15

Because the goods offered for sale in a competitive market are largely the same,

Accepted Answer

A) there will be few sellers in the market. 
B) there will be few buyers in the market. 
C) only a few buyers will have market power. 
D) sellers will have little reason to charge less than the going market price. 
A) there will be few sellers in the market. 
B) there will be few buyers in the market. 
C) only a few buyers will have market power. 
D) sellers will have little reason to charge less than the going market price.

Question 16

​Table 14-17
The table below shows the price and cost information for a firm that operates in a perfectly competitive market.  
-​Refer to Table 14-17. The marginal cost of the fourth unit is

Accepted Answer

A) ​$28. 
B) ​$32. 
C) ​$5. 
D) ​$7. 
A) ​$28. 
B) ​$32. 
C) ​$5. 
D) ​$7.

Question 17

Table 14-14
The following table presents cost and revenue information for Bob's bakery production and sales.  
-Refer to Table 14-14. At what quantity will Bob maximize his 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 18

The firm will make the most profits if it produces the quantity of output at which

Accepted Answer

A) marginal cost equals average cost. 
B) profit per unit is greatest. 
C) marginal revenue equals total revenue. 
D) marginal revenue equals marginal cost. 
A) marginal cost equals average cost. 
B) profit per unit is greatest. 
C) marginal revenue equals total revenue. 
D) marginal revenue equals marginal cost.

Question 19

When the process of entry and exit has ended in a competitive market, are firms' profits positive, negative, or zero?

Accepted Answer

At the end of the en

Question 20

Who is a price taker in a competitive market?

Accepted Answer

A) buyers only 
B) sellers only 
C) both buyers and sellers 
D) neither buyers nor sellers 
A) buyers only 
B) sellers only 
C) both buyers and sellers 
D) neither buyers nor sellers

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the average revenue when 4 units are sold?

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price is $5.00, the firm will earn

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. If the market price is $6, what is the firm's short-run economic profit?

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.

Table 14-15 -Refer to Table 14-15. What is the lowest price at which this firm would operate in the short run?

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

In the long-run equilibrium of a market with free entry and exit, if all firms have the same cost structure, then

A competitive firm's short-run supply curve is part of which of the following curves?

Which of the following expressions is correct for a competitive firm?

Because the goods offered for sale in a competitive market are largely the same,

Table 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -Refer to Table 14-17. The marginal cost of the fourth unit is

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. At what quantity will Bob maximize his profit?

The firm will make the most profits if it produces the quantity of output at which

When the process of entry and exit has ended in a competitive market, are firms' profits positive, negative, or zero?

Who is a price taker in a competitive market?

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

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the average revenue when 4 units are sold?

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price is $5.00, the firm will earn

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. If the market price is $6, what is the firm's short-run economic profit?

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.

Table 14-15 -Refer to Table 14-15. What is the lowest price at which this firm would operate in the short run?

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

In the long-run equilibrium of a market with free entry and exit, if all firms have the same cost structure, then

A competitive firm's short-run supply curve is part of which of the following curves?

Which of the following expressions is correct for a competitive firm?

Because the goods offered for sale in a competitive market are largely the same,

​Table 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -​Refer to Table 14-17. The marginal cost of the fourth unit is

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. At what quantity will Bob maximize his profit?

The firm will make the most profits if it produces the quantity of output at which

When the process of entry and exit has ended in a competitive market, are firms' profits positive, negative, or zero?

Who is a price taker in a competitive market?

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 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -Refer to Table 14-17. The marginal cost of the fourth unit is