Question 1

The perfectly competitive firm's short-run supply curve is the

Accepted Answer

A) upward-sloping portion of its average total cost curve. 
B) horizontal portion of its marginal revenue curve. 
C) portion of its average variable cost curve that lies above the average fixed cost curve. 
D) upward-sloping portion of its marginal cost curve. 
E) portion of its marginal cost curve that lies above its average variable cost curve. 
A) upward-sloping portion of its average total cost curve. 
B) horizontal portion of its marginal revenue curve. 
C) portion of its average variable cost curve that lies above the average fixed cost curve. 
D) upward-sloping portion of its marginal cost curve. 
E) portion of its marginal cost curve that lies above its average variable cost curve.

Question 2

In short-run equilibrium, the perfectly competitive firm may be making __________ economic profits.

Accepted Answer

A) positive 
B) zero 
C) negative 
D) a or b 
E) any of the above 
A) positive 
B) zero 
C) negative 
D) a or b 
E) any of the above

Question 3

The perfectly competitive firm will seek to produce the level of output for which

Accepted Answer

A) average variable cost is at a minimum. 
B) average total cost is at a minimum. 
C) average fixed cost is at a minimum. 
D) marginal cost equals marginal revenue. 
A) average variable cost is at a minimum. 
B) average total cost is at a minimum. 
C) average fixed cost is at a minimum. 
D) marginal cost equals marginal revenue.

Question 4

Exhibit 22-7
​
  
-Refer to Exhibit 22-7. At the profit-maximizing output level, the firm's total revenue is

Accepted Answer

A) $60.00. 
B) $225.00. 
C) $300.00. 
D) $360.00. 
E) $420.00. 
A) $60.00. 
B) $225.00. 
C) $300.00. 
D) $360.00. 
E) $420.00.

Question 5

The short-run industry supply curve is the

Accepted Answer

A) horizontal summation of the short-run supply curves for all firms in the industry. 
B) vertical summation of the short-run supply curves for all firms in the industry. 
C) average of the short-run supply curves for all firms in the industry. 
D) same as that of the typical firm in the industry. 
A) horizontal summation of the short-run supply curves for all firms in the industry. 
B) vertical summation of the short-run supply curves for all firms in the industry. 
C) average of the short-run supply curves for all firms in the industry. 
D) same as that of the typical firm in the industry.

Question 6

Suppose one firm in a perfectly competitive industry experiences an increase in its costs of production. Which of the following best describes the most likely long run adjustment to this situation?

Accepted Answer

A) Eventually, all firms in the industry will also experience this same increase in costs. 
B) Eventually, the price of the product will increase, and consumers will pay for the increase in costs. 
C) The firm in question may suffer losses and exit the industry. 
D) none of the above 
A) Eventually, all firms in the industry will also experience this same increase in costs. 
B) Eventually, the price of the product will increase, and consumers will pay for the increase in costs. 
C) The firm in question may suffer losses and exit the industry. 
D) none of the above

Question 7

A "price taker" is a firm that

Accepted Answer

A) does not have the ability to control the price of the product it sells. 
B) does have the ability, although limited, to control the price of the product it sells. 
C) can raise the price of the product (above the market price) and still sell some units of its product. 
D) sells a differentiated product. 
E) none of the above 
A) does not have the ability to control the price of the product it sells. 
B) does have the ability, although limited, to control the price of the product it sells. 
C) can raise the price of the product (above the market price) and still sell some units of its product. 
D) sells a differentiated product. 
E) none of the above

Question 8

In long-run competitive equilibrium P = SRATC, because if P > SRATC

Accepted Answer

A) losses in the industry would cause some existing firms to exit the industry. 
B) positive economic profit would attract firms to the industry in order to obtain the profits. 
C) firms would not be producing the quantity of output at which MR = MC. 
D) firms would not be covering total fixed costs. 
E) none of the above 
A) losses in the industry would cause some existing firms to exit the industry. 
B) positive economic profit would attract firms to the industry in order to obtain the profits. 
C) firms would not be producing the quantity of output at which MR = MC. 
D) firms would not be covering total fixed costs. 
E) none of the above

Question 9

Assume that a decreasing-cost industry experiences an increase in demand. In the long run, this will

Accepted Answer

A) lead to a price increase. 
B) lead to a price decrease. 
C) have no influence on price. 
D) a or b, depending on the marginal cost curve 
A) lead to a price increase. 
B) lead to a price decrease. 
C) have no influence on price. 
D) a or b, depending on the marginal cost curve

Question 10

A decreasing-cost industry has a long-run supply curve that is upward sloping.

Accepted Answer

A) True 
 B)False

Question 11

In the short run, if price (P) is less than average total cost (ATC) will a perfectly competitive firm necessarily shut down? Explain why or why not using a hypothetical numerical example.

Accepted Answer

While it is true that a firm would be lo

Question 12

The perfectly competitive firm's short-run supply curve is that portion of its MC curve that lies above its AFC curve.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) $300 
B) $700 
C) $1,000 
D) $400 
A) $300 
B) $700 
C) $1,000 
D) $400

Question 14

If the long-run industry supply curve is downward-sloping, it follows that there are __________ costs in the industry.

Accepted Answer

A) increasing 
B) constant 
C) decreasing 
D) a or b 
E) There is not enough information to answer the question. 
A) increasing 
B) constant 
C) decreasing 
D) a or b 
E) There is not enough information to answer the question.

Question 15

In the long run, a firm earns zero economic profit, given the condition that

Accepted Answer

A) P = MR. 
B) P = AVC. 
C) P = ATC. 
D) (P - M
C)  = 0. 
E) none of the above 
A) P = MR. 
B) P = AVC. 
C) P = ATC. 
D) (P - M
C)  = 0. 
E) none of the above

Question 16

Exhibit 22-7
​
  
-Refer to Exhibit 22-7. At the profit-maximizing level of output, marginal cost is

Accepted Answer

A) $60.00. 
B) $4.50. 
C) $5.00. 
D) $6.00. 
E) This cannot be determined based on the information provided. 
A) $60.00. 
B) $4.50. 
C) $5.00. 
D) $6.00. 
E) This cannot be determined based on the information provided.

Question 17

Exhibit 22-1
​
   ​
-Refer to Exhibit 22-1. The marginal revenue curve represented by the information in this table is

Accepted Answer

A) downward-sloping. 
B) upward-sloping. 
C) horizontal. 
D) vertical. 
A) downward-sloping. 
B) upward-sloping. 
C) horizontal. 
D) vertical.

Question 18

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

Accepted Answer

A) $6 
B) $750 
C) $1,650 
D) $900 
A) $6 
B) $750 
C) $1,650 
D) $900

Question 19

In a perfectly competitive industry, there is a motive for __________ to advertise in order to induce a rightward shift of the demand curve.

Accepted Answer

A) the typical firm 
B) the industry as a whole 
C) both the typical firm and the industry as a whole 
D) neither the typical firm nor the industry as a whole 
A) the typical firm 
B) the industry as a whole 
C) both the typical firm and the industry as a whole 
D) neither the typical firm nor the industry as a whole

Question 20

Exhibit 22-7
​
  
-Refer to Exhibit 22-7. What is the profit at 60 units of output?

Accepted Answer

A) $360 
B) $90 
C) $75 
D) $60 
A) $360 
B) $90 
C) $75 
D) $60

Exam 22: Perfect Competition

The perfectly competitive firm's short-run supply curve is the

In short-run equilibrium, the perfectly competitive firm may be making __________ economic profits.

The perfectly competitive firm will seek to produce the level of output for which

Exhibit 22-7 ​ -Refer to Exhibit 22-7. At the profit-maximizing output level, the firm's total revenue is

The short-run industry supply curve is the

Suppose one firm in a perfectly competitive industry experiences an increase in its costs of production. Which of the following best describes the most likely long run adjustment to this situation?

A "price taker" is a firm that

In long-run competitive equilibrium P = SRATC, because if P > SRATC

Assume that a decreasing-cost industry experiences an increase in demand. In the long run, this will

A decreasing-cost industry has a long-run supply curve that is upward sloping.

In the short run, if price (P) is less than average total cost (ATC) will a perfectly competitive firm necessarily shut down? Explain why or why not using a hypothetical numerical example.

The perfectly competitive firm's short-run supply curve is that portion of its MC curve that lies above its AFC curve.

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

If the long-run industry supply curve is downward-sloping, it follows that there are __________ costs in the industry.

In the long run, a firm earns zero economic profit, given the condition that

Exhibit 22-7 ​ -Refer to Exhibit 22-7. At the profit-maximizing level of output, marginal cost is

Exhibit 22-1 ​ ​ -Refer to Exhibit 22-1. The marginal revenue curve represented by the information in this table is

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

In a perfectly competitive industry, there is a motive for __________ to advertise in order to induce a rightward shift of the demand curve.

Exhibit 22-7 ​ -Refer to Exhibit 22-7. What is the profit at 60 units of output?

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 22-7 -Refer to Exhibit 22-7. At the profit-maximizing output level, the firm's total revenue is

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

Exhibit 22-7 -Refer to Exhibit 22-7. At the profit-maximizing level of output, marginal cost is

Exhibit 22-1 -Refer to Exhibit 22-1. The marginal revenue curve represented by the information in this table is

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

Exhibit 22-7 -Refer to Exhibit 22-7. What is the profit at 60 units of output?