Question 1

The price charged by a perfectly competitive firm is determined by

Accepted Answer

A) the firm's demand curve alone. 
B) the firm's cost curves alone. 
C) market demand and market supply, together. 
D) market demand alone. 
E) market supply alone. 
A) the firm's demand curve alone. 
B) the firm's cost curves alone. 
C) market demand and market supply, together. 
D) market demand alone. 
E) market supply alone.

Question 2

Exhibit 22-10
   ​
-Refer to Exhibit 22-10. Is the firm depicted here a perfectly competitive firm?

Accepted Answer

A) Yes, because marginal revenue is constant. 
B) Yes, because total revenue increases as output increases. 
C) No, because marginal cost is not constant. 
D) No, because marginal cost falls for some levels of output and rises for other levels of output. 
A) Yes, because marginal revenue is constant. 
B) Yes, because total revenue increases as output increases. 
C) No, because marginal cost is not constant. 
D) No, because marginal cost falls for some levels of output and rises for other levels of output.

Question 3

The demand curve faced by a perfectly competitive firm is horizontal at the price determined in the market.

Accepted Answer

A) True 
 B)False

Question 4

In a perfectly competitive market, if a resource that one firm utilizes is superior to resources used by other firms, and, as a result, lowers unit costs for the firm, that firm is likely to earn __________ in the short run. In time, however, the firm's __________ curve will rise to reflect the superior-quality of the resource it employs and the firm will then earn __________.

Accepted Answer

A) normal profit; ATC; positive economic profit 
B) positive economic profit; ATC; normal profit 
C) positive economic profit; marginal revenue; zero profit 
D) losses; ATC; positive economic profit 
E) none of the above 
A) normal profit; ATC; positive economic profit 
B) positive economic profit; ATC; normal profit 
C) positive economic profit; marginal revenue; zero profit 
D) losses; ATC; positive economic profit 
E) none of the above

Question 5

Exhibit 22-8
​
  
-Refer to Exhibit 22-8. What is the total fixed cost of firm B at the profit-maximizing (or loss-minimizing) level of output?

Accepted Answer

A) $5 
B) $750 
C) $90 
D) $400 
E) There is not enough information provided to answer this question. 
A) $5 
B) $750 
C) $90 
D) $400 
E) There is not enough information provided to answer this question.

Question 6

For a price taker, market equilibrium price is $50. At 1,000 units, MR = MC, ATC = $45, and AVC = $30. This price taker will

Accepted Answer

A) earn $50,000 profits if it produces 1,000 units of the good. 
B) earn $5,000 profits if it produces 1,000 units. 
C) shut down its operation, and by doing this minimize its losses. 
D) maximize its profits if it produces fewer than 1,000 units. 
E) maximize its profits if it produces more than 1,000 units. 
A) earn $50,000 profits if it produces 1,000 units of the good. 
B) earn $5,000 profits if it produces 1,000 units. 
C) shut down its operation, and by doing this minimize its losses. 
D) maximize its profits if it produces fewer than 1,000 units. 
E) maximize its profits if it produces more than 1,000 units.

Question 7

A decreasing-cost industry is characterized by

Accepted Answer

A) an upward-sloping long-run supply curve. 
B) a downward-sloping long-run supply curve. 
C) a perfectly elastic long-run supply curve. 
D) perfectly elastic short-run and long-run supply curves. 
E) a perfectly elastic short-run supply curve and an upward-sloping long-run supply curve. 
A) an upward-sloping long-run supply curve. 
B) a downward-sloping long-run supply curve. 
C) a perfectly elastic long-run supply curve. 
D) perfectly elastic short-run and long-run supply curves. 
E) a perfectly elastic short-run supply curve and an upward-sloping long-run supply curve.

Exam 22: Perfect Competition

The price charged by a perfectly competitive firm is determined by

Exhibit 22-10 ​ -Refer to Exhibit 22-10. Is the firm depicted here a perfectly competitive firm?

The demand curve faced by a perfectly competitive firm is horizontal at the price determined in the market.

Exhibit 22-8 ​ -Refer to Exhibit 22-8. What is the total fixed cost of firm B at the profit-maximizing (or loss-minimizing) level of output?

For a price taker, market equilibrium price is $50. At 1,000 units, MR = MC, ATC = $45, and AVC = $30. This price taker will

A decreasing-cost industry is characterized by

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 22-10 -Refer to Exhibit 22-10. Is the firm depicted here a perfectly competitive firm?

Exhibit 22-8 -Refer to Exhibit 22-8. What is the total fixed cost of firm B at the profit-maximizing (or loss-minimizing) level of output?