Question 1

In perfect competition:

Accepted Answer

A)  a firm's total revenue is found by multiplying the market price by the firm's quantity of output. 
B)  the firm's total revenue curve is a downward-sloping line. 
C)  at any price, the more sold, the higher a firm's marginal revenue. 
D)  the firm's total revenue curve is nonlinear. 
A)  a firm's total revenue is found by multiplying the market price by the firm's quantity of output. 
B)  the firm's total revenue curve is a downward-sloping line. 
C)  at any price, the more sold, the higher a firm's marginal revenue. 
D)  the firm's total revenue curve is nonlinear.

Question 2

Use the following to answer questions:  
-(Table: Soybean Cost) Look at the table Soybean Cost. What is the break-even price for this farmer?

Accepted Answer

A)  $13.00 
B)  $13.50 
C)  $14.00 
D)  $14.50 
A)  $13.00 
B)  $13.50 
C)  $14.00 
D)  $14.50

Question 3

In the short run, a firm will produce as long as the price is greater than its:

Accepted Answer

A)  ATC. 
B)  MC. 
C)  MR. 
D)  AVC. 
A)  ATC. 
B)  MC. 
C)  MR. 
D)  AVC.

Question 4

A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run _____ curve.

Accepted Answer

A)  marginal revenue 
B)  marginal cost 
C)  industry supply 
D)  production 
A)  marginal revenue 
B)  marginal cost 
C)  industry supply 
D)  production

Question 5

In perfect competition, _____ are _____, and _____ are price takers.

Accepted Answer

A)  all goods; standardized; all market participants 
B)  some goods; standardized; consumers but not producers 
C)  all goods; differentiated; producers but not consumers 
D)  some goods; differentiated; consumers but not producers 
A)  all goods; standardized; all market participants 
B)  some goods; standardized; consumers but not producers 
C)  all goods; differentiated; producers but not consumers 
D)  some goods; differentiated; consumers but not producers

Question 6

Use the following to answer questions:  
-(Table: Variable Costs for Lawns) Look at the table Variable Costs for Lawns. During the summer, Alex runs a lawn-mowing service, and lawn-mowing is a perfectly competitive industry. Assume that costs are constant in each interval; that is, the variable cost of mowing 1 through 10 lawns is $100. His only fixed cost is $1,000 for the mower. His variable costs include fuel, his time, and mower parts. If the price for mowing a lawn is $40, how much is Alex's profit at the profit-maximizing output?

Accepted Answer

A)  -$10 
B)  -$300 
C)  $300 
D)  -$1,000 
A)  -$10 
B)  -$300 
C)  $300 
D)  -$1,000

Question 7

Use the following to answer question:  
-(Table: Short-Run Supply Curve) Look at the table Short-Run Supply Curve. The table lists three supply points for a perfectly competitive firm operating in the short run. If the industry is composed of 120 identical firms, a price of _____ and a quantity of _____ will be a point on the short-run industry supply curve.

Accepted Answer

A)  $5; 1,650 
B)  $1,200; 40 
C)  $960; 3,840 
D)  $10; 4,800 
A)  $5; 1,650 
B)  $1,200; 40 
C)  $960; 3,840 
D)  $10; 4,800

Question 8

The short-run industry supply curve is more elastic than the long-run industry supply curve.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer questions:  
-(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes Sergei's costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $67.50, how many tubs of ice cream will Sergei's firm produce?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 10

Use the following to answer questions:  
-(Table: Cherry Farm) Look at the table Cherry Farm. How much will the industry produce in long-run equilibrium?

Accepted Answer

A)  600 pounds 
B)  500 pounds 
C)  400 pounds 
D)  0 pounds 
A)  600 pounds 
B)  500 pounds 
C)  400 pounds 
D)  0 pounds

Question 11

In the short run, if a perfectly competitive firm chooses to produce, then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the short run, the market price will _____ and the output of a typical firm will _____.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

Question 13

Use the following to answer questions:
Figure: Prices, Cost Curves, and Profits  
-(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P1 and the firm decides to produce at output Q1, then the firm earns:

Accepted Answer

A)  a loss equal to (ba) × Q1. 
B)  a loss equal to (ca) × Q1. 
C)  a loss equal to (bc) × Q1. 
D)  zero. 
A)  a loss equal to (ba) × Q1. 
B)  a loss equal to (ca) × Q1. 
C)  a loss equal to (bc) × Q1. 
D)  zero.

Question 14

Use the following to answer question:
Figure: Revenues, Costs, and Profits for Tomato Producers II  
-(Figure: Revenues, Costs, and Profits for Tomato Producers II) Look at the figure Revenues, Costs, and Profits for Tomato Producers II. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $10. At the farmer's profit-maximizing output, total revenue is _____, total cost is _____, and profit is _____.

Accepted Answer

A)  $90; $72; $18 
B)  $56; $56; $0 
C)  $30; $48; -$18 
D)  $48; $56; -$8 
A)  $90; $72; $18 
B)  $56; $56; $0 
C)  $30; $48; -$18 
D)  $48; $56; -$8

Question 15

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 the market price of a tub of ice cream is $35, how many tubs of ice cream will Sergei produce in the short run?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 16

Use the following to answer questions:  
-(Table: Lilly's Apple Orchard) Look at the table Lilly's Apple Orchard. Lilly is the price-taking owner of an apple orchard. Her orchard has fixed costs of $30. If the price of a bushel of apples is $25, how many bushels will Lilly produce to maximize profit?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 17

In a perfectly competitive market:

Accepted Answer

A)  the price will change to reflect any change in production cost. 
B)  the existence of profits leads firms to exit the industry, while losses lead firms to enter the industry. 
C)  in the long run, economic profits are positive. 
D)  perfect competition generates prices greater than marginal costs. 
A)  the price will change to reflect any change in production cost. 
B)  the existence of profits leads firms to exit the industry, while losses lead firms to enter the industry. 
C)  in the long run, economic profits are positive. 
D)  perfect competition generates prices greater than marginal costs.

Question 18

In the long run, each firm in a perfectly competitive industry will:

Accepted Answer

A)  earn only enough to cover the opportunity costs of the resources used in production. 
B)  produce where MR is greater than MC. 
C)  differentiate its goods. 
D)  increase its price. 
A)  earn only enough to cover the opportunity costs of the resources used in production. 
B)  produce where MR is greater than MC. 
C)  differentiate its goods. 
D)  increase its price.

Question 19

If the Kansas corn market is perfectly competitive, it means there is easy entry into this market.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions:
Figure: The Profit-Maximizing Firm in the Short Run  
-(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. N is the _____ curve.

Accepted Answer

A)  ATC 
B)  MR 
C)  MC 
D)  AVC 
A)  ATC 
B)  MR 
C)  MC 
D)  AVC

In perfect competition:

Use the following to answer questions: -(Table: Soybean Cost) Look at the table Soybean Cost. What is the break-even price for this farmer?

In the short run, a firm will produce as long as the price is greater than its:

A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run _____ curve.

In perfect competition, ___ are _, and ___ are price takers.

The short-run industry supply curve is more elastic than the long-run industry supply curve.

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. How much will the industry produce in long-run equilibrium?

In the short run, if a perfectly competitive firm chooses to produce, then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue.

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the short run, the market price will _ and the output of a typical firm will _.

Use the following to answer questions: Figure: Prices, Cost Curves, and Profits -(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P₁and the firm decides to produce at output Q₁, then the firm earns:

Use the following to answer questions: -(Table: Lilly's Apple Orchard) Look at the table Lilly's Apple Orchard. Lilly is the price-taking owner of an apple orchard. Her orchard has fixed costs of $30. If the price of a bushel of apples is $25, how many bushels will Lilly produce to maximize profit?

In a perfectly competitive market:

In the long run, each firm in a perfectly competitive industry will:

If the Kansas corn market is perfectly competitive, it means there is easy entry into this market.

Use the following to answer questions: Figure: The Profit-Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. N is the _____ curve.

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

In perfect competition:

Use the following to answer questions: -(Table: Soybean Cost) Look at the table Soybean Cost. What is the break-even price for this farmer?

In the short run, a firm will produce as long as the price is greater than its:

A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run _____ curve.

In perfect competition, _____ are _____, and _____ are price takers.

The short-run industry supply curve is more elastic than the long-run industry supply curve.

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. How much will the industry produce in long-run equilibrium?

In the short run, if a perfectly competitive firm chooses to produce, then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue.

Use the following to answer questions: Figure: Prices, Cost Curves, and Profits -(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P1 and the firm decides to produce at output Q1, then the firm earns:

Use the following to answer questions: -(Table: Lilly's Apple Orchard) Look at the table Lilly's Apple Orchard. Lilly is the price-taking owner of an apple orchard. Her orchard has fixed costs of $30. If the price of a bushel of apples is $25, how many bushels will Lilly produce to maximize profit?

In a perfectly competitive market:

In the long run, each firm in a perfectly competitive industry will:

If the Kansas corn market is perfectly competitive, it means there is easy entry into this market.

Use the following to answer questions: Figure: The Profit-Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. N is the _____ curve.

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

In perfect competition, ___ are _, and ___ are price takers.

Use the following to answer questions: Figure: Prices, Cost Curves, and Profits -(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P₁and the firm decides to produce at output Q₁, then the firm earns: