Question 1

A competitive firm's profit will be increasing as long as marginal revenue is greater than marginal cost.

Accepted Answer

A) True 
 B)False

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 marginal revenue from selling the 3rd unit?

Accepted Answer

A) $55 
B) $120 
C) $137 
D) $140 
A) $55 
B) $120 
C) $137 
D) $140

Question 3

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 price is

Accepted Answer

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

Question 4

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 5

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

Accepted Answer

A) its total cost is more than $9,000. 
B) its marginal revenue is less than $10. 
C) its average total cost is less than $10. 
D) the firm cannot be a competitive firm because competitive firms cannot earn positive profits. 
A) its total cost is more than $9,000. 
B) its marginal revenue is less than $10. 
C) its average total cost is less than $10. 
D) the firm cannot be a competitive firm because competitive firms cannot earn positive profits.

Question 6

In a competitive market with free entry and exit, if all firms have the same cost structure, then

Accepted Answer

A) all firms will operate at their efficient scale in the short run. 
B) all firms will operate at their efficient scale in the long run. 
C) the price of the product will differ across firms. 
D) Both a and b are correct. 
A) all firms will operate at their efficient scale in the short run. 
B) all firms will operate at their efficient scale in the long run. 
C) the price of the product will differ across firms. 
D) Both a and b are correct.

Question 7

For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal.

Accepted Answer

A) True 
 B)False

Question 8

A seller in a competitive market can

Accepted Answer

A) sell all he wants at the going price, so he has little reason to charge less. 
B) influence the market price by adjusting his output. 
C) influence the profits earned by competing firms by adjusting his output. 
D) All of the above are correct. 
A) sell all he wants at the going price, so he has little reason to charge less. 
B) influence the market price by adjusting his output. 
C) influence the profits earned by competing firms by adjusting his output. 
D) All of the above are correct.

Question 9

​Table 14-16
The table represents the demand information for a firm in a competitive market.   ​
-Refer to Table 14-16. For this firm, when output is equal to 12 units, average revenue is

Accepted Answer

A) ​$15. 
B) ​$150. 
C) ​always greater than marginal revenue. 
D) ​decreasing. 
A) ​$15. 
B) ​$150. 
C) ​always greater than marginal revenue. 
D) ​decreasing.

Question 10

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determine the profit-maximizing level of production.

Accepted Answer

A) True 
 B)False

Question 11

​In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Accepted Answer

A) True 
 B)False

Question 12

The stable, long-run equilibrium in a competitive market occurs when the market price equals the lowest point on a firm's average total cost curve.

Accepted Answer

A) True 
 B)False

Question 13

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 rises above $6.30, 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 14

Table 14-12  
-Refer to Table 14-12. What is the marginal cost of the 8th unit?

Accepted Answer

A) $0 
B) $72.75 
C) $120 
D) $502 
A) $0 
B) $72.75 
C) $120 
D) $502

Question 15

A firm that shuts down temporarily has to pay

Accepted Answer

A) its variable costs but not its fixed costs. 
B) its fixed costs but not its variable costs. 
C) both its variable costs and its fixed costs. 
D) neither its variable costs nor its fixed costs. 
A) its variable costs but not its fixed costs. 
B) its fixed costs but not its variable costs. 
C) both its variable costs and its fixed costs. 
D) neither its variable costs nor its fixed costs.

Question 16

Which of the following firms is the closest to being a perfectly competitive firm?

Accepted Answer

A) the New York Yankees 
B) Apple, Inc. 
C) DeBeers diamond wholesalers 
D) a wheat farmer in Kansas 
A) the New York Yankees 
B) Apple, Inc. 
C) DeBeers diamond wholesalers 
D) a wheat farmer in Kansas

Question 17

Free entry means that

Accepted Answer

A) the government pays any entry costs for individual firms. 
B) government-funded research lowers the costs of patents and other barriers to entry. 
C) a firm's marginal cost is zero. 
D) no legal barriers prevent a firm from entering an industry. 
A) the government pays any entry costs for individual firms. 
B) government-funded research lowers the costs of patents and other barriers to entry. 
C) a firm's marginal cost is zero. 
D) no legal barriers prevent a firm from entering an industry.

Question 18

Table 14-14
The following table presents cost and revenue information for Bob's bakery production and sales.  
-Refer to Table 14-14. When Bob produces and sells the profit-maximizing quantity, how much profit does he earn?

Accepted Answer

A) $0.25 
B) $2.75 
C) $4.00 
D) $5.25 
A) $0.25 
B) $2.75 
C) $4.00 
D) $5.25

Question 19

Suppose that a competitive market is initially in equilibrium. Then demand increases. If entering firms face the same costs as existing firms and sufficient resources are available for entering firms,

Accepted Answer

A) the long-run market supply curve will be upward sloping. 
B) the long-run market supply curve will be perfectly elastic. 
C) in the long run firms will suffer economic losses, leading them to exit the industry. 
D) the number of firms will decrease, and the market will become a monopoly. 
A) the long-run market supply curve will be upward sloping. 
B) the long-run market supply curve will be perfectly elastic. 
C) in the long run firms will suffer economic losses, leading them to exit the industry. 
D) the number of firms will decrease, and the market will become a monopoly.

Question 20

​Perfectly competitive markets are characterized by

Accepted Answer

A) ​conditions that discourage new firms from entering the market. 
B) ​conditions that allow firms to determine how much they wish to produce, without influencing the market price. 
C) ​conditions that presume that each firm produces a unique product. 
D) ​conditions that force firms to advertise their product heavily, to compete with other producers. 
A) ​conditions that discourage new firms from entering the market. 
B) ​conditions that allow firms to determine how much they wish to produce, without influencing the market price. 
C) ​conditions that presume that each firm produces a unique product. 
D) ​conditions that force firms to advertise their product heavily, to compete with other producers.

Exam 14: Firms in Competitive Markets

A competitive firm's profit will be increasing as long as marginal revenue is greater than marginal cost.

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 marginal revenue from selling the 3rd unit?

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 price is

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

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

In a competitive market with free entry and exit, if all firms have the same cost structure, then

For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal.

A seller in a competitive market can

​Table 14-16 The table represents the demand information for a firm in a competitive market. ​ -Refer to Table 14-16. For this firm, when output is equal to 12 units, average revenue is

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determine the profit-maximizing level of production.

​In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

The stable, long-run equilibrium in a competitive market occurs when the market price equals the lowest point on a firm's average total cost curve.

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 rises above $6.30, the firm will earn

Table 14-12 -Refer to Table 14-12. What is the marginal cost of the 8th unit?

A firm that shuts down temporarily has to pay

Which of the following firms is the closest to being a perfectly competitive firm?

Free entry means that

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. When Bob produces and sells the profit-maximizing quantity, how much profit does he earn?

Suppose that a competitive market is initially in equilibrium. Then demand increases. If entering firms face the same costs as existing firms and sufficient resources are available for entering firms,

​Perfectly competitive markets are characterized by

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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, when output is equal to 12 units, average revenue is

In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Perfectly competitive markets are characterized by