Question 1

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 $4.00, 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 2

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:  
-Refer to Table 14-9. At which quantity of output is marginal revenue equal to marginal cost?

Accepted Answer

A) 3 units 
B) 5 units 
C) 7 units 
D) 9 units 
A) 3 units 
B) 5 units 
C) 7 units 
D) 9 units

Question 3

Entry into a market by new firms will increase the

Accepted Answer

A) supply of the good. 
B) profits of existing firms. 
C) price of the good. 
D) marginal cost of producing the good. 
A) supply of the good. 
B) profits of existing firms. 
C) price of the good. 
D) marginal cost of producing the good.

Question 4

The long-run supply curve in a competitive market is more elastic than the short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 5

Table 14-3
The table represents a demand curve faced by a firm in a competitive market.  
-Refer to Table 14-3. For this firm, the average revenue is

Accepted Answer

A) $39. 
B) $26. 
C) $13. 
D) $0. 
A) $39. 
B) $26. 
C) $13. 
D) $0.

Question 6

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:  
-Refer to Table 14-9. If the firm produces 3 units of output,

Accepted Answer

A) marginal cost is $4. 
B) total revenue is greater than variable cost. 
C) marginal revenue is less than marginal cost. 
D) the firm is maximizing profit. 
A) marginal cost is $4. 
B) total revenue is greater than variable cost. 
C) marginal revenue is less than marginal cost. 
D) the firm is maximizing profit.

Question 7

For an individual firm operating in a competitive market, marginal revenue equals

Accepted Answer

A) average revenue and the price for all levels of output. 
B) average revenue, which is greater than the price for all levels of output. 
C) average revenue, the price, and marginal cost for all levels of output. 
D) marginal cost, which is greater than average revenue for all levels of output. 
A) average revenue and the price for all levels of output. 
B) average revenue, which is greater than the price for all levels of output. 
C) average revenue, the price, and marginal cost for all levels of output. 
D) marginal cost, which is greater than average revenue for all levels of output.

Question 8

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:  
-Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

Accepted Answer

A) $1. 
B) $3. 
C) $4.50. 
D) $6.30. 
A) $1. 
B) $3. 
C) $4.50. 
D) $6.30.

Question 9

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i)
Marginal revenue equals $3.
(ii)
Average revenue equals $100.
(iii)
Total revenue equals $300.

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 10

Table 14-1  
-Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

Accepted Answer

A) monopoly. 
B) concentrated market. 
C) competitive market. 
D) strategic market. 
A) monopoly. 
B) concentrated market. 
C) competitive market. 
D) strategic market.

Question 11

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves:  
-Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Accepted Answer

A) (P4 - P2) × Q2. 
B) (P2 - P1) × (Q2-Q1). 
C) At a market price of P2, the firm earns profits, not losses. 
D) At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses. 
A) (P4 - P2) × Q2. 
B) (P2 - P1) × (Q2-Q1). 
C) At a market price of P2, the firm earns profits, not losses. 
D) At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses.

Question 12

Scenario 14-1
Assume a certain firm in a competitive market 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.
-Refer to Scenario 14-1. At Q = 999, the firm's total costs equal

Accepted Answer

A) $10,985. 
B) $10,990. 
C) $10,995. 
D) $10,999. 
A) $10,985. 
B) $10,990. 
C) $10,995. 
D) $10,999.

Question 13

​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. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?

Accepted Answer

A) ​$32. 
B) ​$40. 
C) ​$4. 
D) ​$6. 
A) ​$32. 
B) ​$40. 
C) ​$4. 
D) ​$6.

Question 14

Competitive firms that earn a loss in the short run should

Accepted Answer

A) shut down if P < AVC. 
B) raise their price. 
C) lower their output. 
D) All of the above are correct. 
A) shut down if P < AVC. 
B) raise their price. 
C) lower their output. 
D) All of the above are correct.

Question 15

In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of

Accepted Answer

A) average fixed cost for the marginal firm. 
B) marginal cost of the marginal firm. 
C) average total cost of the marginal firm. 
D) average variable cost of the marginal firm. 
A) average fixed cost for the marginal firm. 
B) marginal cost of the marginal firm. 
C) average total cost of the marginal firm. 
D) average variable cost of the marginal firm.

Question 16

Under what condition is the long-run market supply curve for a competitive market perfectly elastic?

Accepted Answer

There must exist a l

Question 17

In a certain large city there are two firms that supply concrete. The concrete sold by the first firm is indistinguishable from the concrete sold by the second firm. Is the market competitive?

Accepted Answer

The market is not co

Question 18

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i)
Marginal revenue equals $4.
(ii)
Average revenue equals $100.
(iii)
Total revenue equals $1,600.

Accepted Answer

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

Question 19

List and describe the characteristics of a perfectly competitive market.

Accepted Answer

There are many buyers and sell

Question 20

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

Accepted Answer

A) True 
 B)False

Exam 14: Firms in Competitive Markets

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 $4.00, the firm will earn

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. At which quantity of output is marginal revenue equal to marginal cost?

Entry into a market by new firms will increase the

The long-run supply curve in a competitive market is more elastic than the short-run supply curve.

Table 14-3 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-3. For this firm, the average revenue is

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. If the firm produces 3 units of output,

For an individual firm operating in a competitive market, marginal revenue equals

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $100. (iii) Total revenue equals $300.

Table 14-1 -Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Scenario 14-1 Assume a certain firm in a competitive market 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. -Refer to Scenario 14-1. At Q = 999, the firm's total costs equal

​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. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?

Competitive firms that earn a loss in the short run should

In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of

Under what condition is the long-run market supply curve for a competitive market perfectly elastic?

In a certain large city there are two firms that supply concrete. The concrete sold by the first firm is indistinguishable from the concrete sold by the second firm. Is the market competitive?

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600.

List and describe the characteristics of a perfectly competitive market.

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

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. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?