Question 1

Use the following to answer questions:  
-(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $6 per pound:

Accepted Answer

A)  firms will enter the industry. 
B)  firms will exit the industry. 
C)  the industry is in long-run equilibrium. 
D)  the industry has minimized average total cost. 
A)  firms will enter the industry. 
B)  firms will exit the industry. 
C)  the industry is in long-run equilibrium. 
D)  the industry has minimized average total cost.

Question 2

Use the following to answer questions:
Figure: Revenues, Costs, and Profits for Tomato Producers III  
-(Figure: Revenues, Costs, and Profits for Tomato Producers III) Look at the figure Revenues, Costs, and Profits for Tomato Producers III. The market for tomatoes is perfectly competitive. If market price of a bushel of tomatoes is $18, in the short run the farmer's profit-maximizing output is _____ bushels.

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 3

If a firm's economic profits are equal to zero, its accounting profits are most likely:

Accepted Answer

A)  less than zero. 
B)  greater than economic profits. 
C)  less than economic profits. 
D)  equal to zero. 
A)  less than zero. 
B)  greater than economic profits. 
C)  less than economic profits. 
D)  equal to zero.

Question 4

For a firm in a perfectly competitive market _____ revenue equals _____.

Accepted Answer

A)  marginal; total revenue 
B)  marginal; market price 
C)  net; price 
D)  net; marginal revenue 
A)  marginal; total revenue 
B)  marginal; market price 
C)  net; price 
D)  net; marginal revenue

Question 5

Use the following to answer question:
Figure: Revenues, Costs, and Profits for Tomato Producers  
-(Figure: Revenues, Costs, and Profits for Tomato Producers) Look at the figure Revenues, Costs, and Profits for Tomato Producers. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. At the profit-maximizing quantity of output in the figure, the farmer's total revenue is _____, total cost is _____, and profit is _____.

Accepted Answer

A)  $90; $14; $76 
B)  $90; $70; $20 
C)  $30; $42; -$12 
D)  $48; $56; -$8 
A)  $90; $14; $76 
B)  $90; $70; $20 
C)  $30; $42; -$12 
D)  $48; $56; -$8

Question 6

Use the following to answer questions:  
-(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a Perfectly Competitive Firm. The firm will stop production and shut down if the price is:

Accepted Answer

A)  $2.50. 
B)  $3.50. 
C)  $4.50. 
D)  $5.00. 
A)  $2.50. 
B)  $3.50. 
C)  $4.50. 
D)  $5.00.

Question 7

Use the following to answer questions:
Figure: Costs and Profits for Tomato Producers  
-(Figure: Costs and Profits for Tomato Producers) Look at the figure Costs and Profits for Tomato Producers. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. If the market price increases to $20, the farmer's marginal revenue _____ and the profit-maximizing output _____.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 8

Why is the market for soybeans a better example of perfect competition than the market for cars?

Accepted Answer

The market for soybeans is likely a bett

Question 9

The marginal revenue received by a firm in a perfectly competitive market:

Accepted Answer

A)  is unrelated to the market price. 
B)  is less than the market price. 
C)  is greater than the market price. 
D)  is the change in total revenue divided by the change in output. 
A)  is unrelated to the market price. 
B)  is less than the market price. 
C)  is greater than the market price. 
D)  is the change in total revenue divided by the change in output.

Question 10

In the short run, a firm will continue to sell its product as long as:

Accepted Answer

A)  it is making a positive profit. 
B)  the price is greater than average total costs. 
C)  the price is greater than average variable costs. 
D)  its marginal cost is increasing. 
A)  it is making a positive profit. 
B)  the price is greater than average total costs. 
C)  the price is greater than average variable costs. 
D)  its marginal cost is increasing.

Question 11

Use the following to answer questions:  
-(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all natural ice cream firm. If there are 100 firms in the all-natural ice cream industry, which of the following is a point on the industry short-run supply curve?

Accepted Answer

A)  P = $10; Q = 0 
B)  P = $20; Q = 200 
C)  P = $110; Q = 3 
D)  P = $75; Q = 500 
A)  P = $10; Q = 0 
B)  P = $20; Q = 200 
C)  P = $110; Q = 3 
D)  P = $75; Q = 500

Question 12

When a perfectly competitive industry is in long-run equilibrium, its firms:

Accepted Answer

A)  earn more than zero economic profits. 
B)  combine their variable and fixed resources inefficiently. 
C)  are not in short-run equilibrium. 
D)  allocate all of their resources efficiently. 
A)  earn more than zero economic profits. 
B)  combine their variable and fixed resources inefficiently. 
C)  are not in short-run equilibrium. 
D)  allocate all of their resources efficiently.

Question 13

Use the following to answer questions:
Figure: The Marginal Decision Rule  
-(Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. If P1 is the market price and if this firm is maximizing profit, it should produce:

Accepted Answer

A)  where MR > MC. 
B)  at quantity q2. 
C)  at quantity q1, where MR > MC. 
D)  a quantity greater than q1 but less than q2. 
A)  where MR > MC. 
B)  at quantity q2. 
C)  at quantity q1, where MR > MC. 
D)  a quantity greater than q1 but less than q2.

Question 14

If a perfectly competitive firm decreases production from 11 units to 10 units and the market price is $20 per unit, total revenue for 10 units is:

Accepted Answer

A)  $10. 
B)  $20. 
C)  $200. 
D)  $210. 
A)  $10. 
B)  $20. 
C)  $200. 
D)  $210.

Question 15

Use the following to answer questions:  
-(Table: Cherry Farm) Look at the table Cherry Farm. If Hank and Helen have one of 100 farms in the perfectly competitive cherry industry and if the price is $3, in the short run the industry will supply _____ pounds.

Accepted Answer

A)  0 
B)  100 
C)  200 
D)  300 
A)  0 
B)  100 
C)  200 
D)  300

Question 16

The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, cornflakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:

Accepted Answer

A)  many buyers and sellers. 
B)  a standardized product. 
C)  ease of entry. 
D)  ease of exit. 
A)  many buyers and sellers. 
B)  a standardized product. 
C)  ease of entry. 
D)  ease of exit.

Question 17

An assumption of the model of perfect competition is:

Accepted Answer

A)  discrimination. 
B)  difficult entry and exit. 
C)  many buyers and sellers. 
D)  limited information. 
A)  discrimination. 
B)  difficult entry and exit. 
C)  many buyers and sellers. 
D)  limited information.

Question 18

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, that the price of each candy cane is $0.10, and that the market demand curve is downward-sloping. The price of sugar rises, increasing the marginal and average total cost of producing candy canes by $0.05; there are no other changes in production costs. In the long run we will observe:

Accepted Answer

A)  firms leaving the industry. 
B)  firms entering the industry. 
C)  some firms entering and some firms leaving. 
D)  neither entry to nor exit from the industry. 
A)  firms leaving the industry. 
B)  firms entering the industry. 
C)  some firms entering and some firms leaving. 
D)  neither entry to nor exit from the industry.

Question 19

Use the following to answer questions:  
-(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $3.60 per pound:

Accepted Answer

A)  firms will enter the industry. 
B)  firms will exit the industry. 
C)  the industry is in long-run equilibrium. 
D)  the industry has minimized average total cost. 
A)  firms will enter the industry. 
B)  firms will exit the industry. 
C)  the industry is in long-run equilibrium. 
D)  the industry has minimized average total cost.

Question 20

If some firms in a perfectly competitive industry are earning positive economic profits, then in the long run, the:

Accepted Answer

A)  industry is in equilibrium. 
B)  short-run industry supply curve will shift to the right. 
C)  number of firms in the industry will not change. 
D)  number of firms in the industry will decrease. 
A)  industry is in equilibrium. 
B)  short-run industry supply curve will shift to the right. 
C)  number of firms in the industry will not change. 
D)  number of firms in the industry will decrease.

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $6 per pound:

If a firm's economic profits are equal to zero, its accounting profits are most likely:

For a firm in a perfectly competitive market _ revenue equals _.

Use the following to answer questions: -(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a Perfectly Competitive Firm. The firm will stop production and shut down if the price is:

Why is the market for soybeans a better example of perfect competition than the market for cars?

The marginal revenue received by a firm in a perfectly competitive market:

In the short run, a firm will continue to sell its product as long as:

When a perfectly competitive industry is in long-run equilibrium, its firms:

Use the following to answer questions: Figure: The Marginal Decision Rule -(Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. If P₁ is the market price and if this firm is maximizing profit, it should produce:

If a perfectly competitive firm decreases production from 11 units to 10 units and the market price is $20 per unit, total revenue for 10 units is:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If Hank and Helen have one of 100 farms in the perfectly competitive cherry industry and if the price is $3, in the short run the industry will supply _____ pounds.

The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, cornflakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:

An assumption of the model of perfect competition is:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $3.60 per pound:

If some firms in a perfectly competitive industry are earning positive economic profits, then in the long run, the:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 12: Perfect Competition and the Supply Curve

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $6 per pound:

If a firm's economic profits are equal to zero, its accounting profits are most likely:

For a firm in a perfectly competitive market _____ revenue equals _____.

Use the following to answer questions: -(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a Perfectly Competitive Firm. The firm will stop production and shut down if the price is:

Why is the market for soybeans a better example of perfect competition than the market for cars?

The marginal revenue received by a firm in a perfectly competitive market:

In the short run, a firm will continue to sell its product as long as:

When a perfectly competitive industry is in long-run equilibrium, its firms:

Use the following to answer questions: Figure: The Marginal Decision Rule -(Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. If P1 is the market price and if this firm is maximizing profit, it should produce:

If a perfectly competitive firm decreases production from 11 units to 10 units and the market price is $20 per unit, total revenue for 10 units is:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If Hank and Helen have one of 100 farms in the perfectly competitive cherry industry and if the price is $3, in the short run the industry will supply _____ pounds.

The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, cornflakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:

An assumption of the model of perfect competition is:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If the price is $3.60 per pound:

If some firms in a perfectly competitive industry are earning positive economic profits, then in the long run, the:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

For a firm in a perfectly competitive market _ revenue equals _.

Use the following to answer questions: Figure: The Marginal Decision Rule -(Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. If P₁ is the market price and if this firm is maximizing profit, it should produce: