Question 1

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

Accepted Answer

A)  of less than $100 but more than $0. 
B)  of more than $100. 
C)  that is negative, that is, it will have an economic loss. 
D)  of zero, that is, it will break even with a normal profit. 
A)  of less than $100 but more than $0. 
B)  of more than $100. 
C)  that is negative, that is, it will have an economic loss. 
D)  of zero, that is, it will break even with a normal profit.

Question 2

-The above figure shows a firm's total revenue line. The firm must be in a market with

Accepted Answer

A)  perfect competition. 
B)  monopolistic competition. 
C)  monopoly. 
D)  oligopoly. 
A)  perfect competition. 
B)  monopolistic competition. 
C)  monopoly. 
D)  oligopoly.

Question 3

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its

Accepted Answer

A)  average total cost. 
B)  marginal cost. 
C)  average variable cost. 
D)  average fixed cost. 
A)  average total cost. 
B)  marginal cost. 
C)  average variable cost. 
D)  average fixed cost.

Question 4

-In the above figure, if the firm increases its output from Q2 to Q3, it will

Accepted Answer

A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit. 
A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit.

Question 5

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the firm

Accepted Answer

A)  would definitely shut down. 
B)  would incur an economic loss. 
C)  would increase its price. 
D)  has total costs less than $2,720. 
A)  would definitely shut down. 
B)  would incur an economic loss. 
C)  would increase its price. 
D)  has total costs less than $2,720.

Question 6

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

Accepted Answer

A)  is greater than marginal cost. 
B)  is greater than short-run average cost. 
C)  is greater than long-run average cost. 
D)  equals long-run average cost. 
A)  is greater than marginal cost. 
B)  is greater than short-run average cost. 
C)  is greater than long-run average cost. 
D)  equals long-run average cost.

Question 7

A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its

Accepted Answer

A)  marginal revenue. 
B)  average total cost. 
C)  average variable cost. 
D)  average fixed cost. 
A)  marginal revenue. 
B)  average total cost. 
C)  average variable cost. 
D)  average fixed cost.

Question 8

In the short run, a perfectly competitive firm will make an economic profit as long as

Accepted Answer

A)  it maximizes its profit. 
B)  P > AVC. 
C)  P > AFC. 
D)  P > ATC. 
A)  it maximizes its profit. 
B)  P > AVC. 
C)  P > AFC. 
D)  P > ATC.

Question 9

A perfectly competitive firm is making an economic profit when

Accepted Answer

A)  its total revenue is greater than its total cost. 
B)  the price is greater than the minimum of its average total cost. 
C)  the price is greater than the minimum of its average variable cost. 
D)  Both answers A and B are correct. 
A)  its total revenue is greater than its total cost. 
B)  the price is greater than the minimum of its average total cost. 
C)  the price is greater than the minimum of its average variable cost. 
D)  Both answers A and B are correct.

Question 10

"Perfectly competitive firms have total control over the price they set for their product." Explain why the previous statement is correct or incorrect.

Accepted Answer

The statement is incorrect. Perfectly co

Question 11

All along the beach in San Diego, California are shops which rent boogie boards by the hour. Tourists perceive that all rental boogie boards are identical, all prices are clearly listed on signs in front of the shops, and there are no restrictions on entry and exit in the boogie board market. What type of market is the boogie board market?

Accepted Answer

A)  monopoly 
B)  oligopoly 
C)  monopolistic competition 
D)  perfect competition 
A)  monopoly 
B)  oligopoly 
C)  monopolistic competition 
D)  perfect competition

Question 12

In a perfectly competitive market in the short run, as the market demand increases, the firms ________ their output and their economic profit ________.

Accepted Answer

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

Question 13

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

Accepted Answer

A)  The firm is producing at minimum long-run average cost. 
B)  Over time, this firm will leave this industry. 
C)  The firm is earning positive economic profit. 
D)  The firm will eventually decrease its production. 
A)  The firm is producing at minimum long-run average cost. 
B)  Over time, this firm will leave this industry. 
C)  The firm is earning positive economic profit. 
D)  The firm will eventually decrease its production.

Question 14

In perfect competition, each individual firm faces ________ demand curve.

Accepted Answer

A)  an inelastic 
B)  an upward sloping 
C)  a perfectly elastic 
D)  a downward sloping 
A)  an inelastic 
B)  an upward sloping 
C)  a perfectly elastic 
D)  a downward sloping

Question 15

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

Accepted Answer

A)  new firms will enter the market and the price will rise. 
B)  some firms will leave the market and the price will fall. 
C)  some firms will leave the market and the price will rise. 
D)  new firms will enter the market and the price will fall. 
A)  new firms will enter the market and the price will rise. 
B)  some firms will leave the market and the price will fall. 
C)  some firms will leave the market and the price will rise. 
D)  new firms will enter the market and the price will fall.

Question 16

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

Accepted Answer

A)  highest; highest 
B)  lowest; lowest 
C)  highest; lowest 
D)  lowest; highest 
A)  highest; highest 
B)  lowest; lowest 
C)  highest; lowest 
D)  lowest; highest

Question 17

A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will

Accepted Answer

A)  lower its price. 
B)  raise its price. 
C)  decrease its output. 
D)  increase its output. 
A)  lower its price. 
B)  raise its price. 
C)  decrease its output. 
D)  increase its output.

Question 18

New reports indicate that eating turnips helps people remain healthy. The news shifts the demand curve for turnips rightward. In response, new farms enter the turnip industry. During the period in which the new farms are entering, the price of a turnip ________ and the economic profit of each existing firm ________.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls

Question 19

For a perfectly competitive firm, price is the same as

Accepted Answer

A)  marginal revenue. 
B)  average variable cost. 
C)  total revenue. 
D)  Both answers A and B are correct. 
A)  marginal revenue. 
B)  average variable cost. 
C)  total revenue. 
D)  Both answers A and B are correct.

Question 20

"A perfectly competitive firm will shut down if the price falls below its average total cost." Do you agree? Explain.

Accepted Answer

A perfectly competitive firm will not sh

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

-The above figure shows a firm's total revenue line. The firm must be in a market with

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its

-In the above figure, if the firm increases its output from Q₂ to Q₃, it will

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the firm

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its

In the short run, a perfectly competitive firm will make an economic profit as long as

A perfectly competitive firm is making an economic profit when

"Perfectly competitive firms have total control over the price they set for their product." Explain why the previous statement is correct or incorrect.

In a perfectly competitive market in the short run, as the market demand increases, the firms their output and their economic profit .

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

In perfect competition, each individual firm faces ________ demand curve.

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

In the long-run equilibrium in a perfectly competitive market, the firms produce at the possible average total cost and the price equals the possible average total cost.

A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will

New reports indicate that eating turnips helps people remain healthy. The news shifts the demand curve for turnips rightward. In response, new farms enter the turnip industry. During the period in which the new farms are entering, the price of a turnip and the economic profit of each existing firm .

For a perfectly competitive firm, price is the same as

"A perfectly competitive firm will shut down if the price falls below its average total cost." Do you agree? Explain.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 12: Perfect Competition

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

-The above figure shows a firm's total revenue line. The firm must be in a market with

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its

-In the above figure, if the firm increases its output from Q2 to Q3, it will

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the firm

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its

In the short run, a perfectly competitive firm will make an economic profit as long as

A perfectly competitive firm is making an economic profit when

"Perfectly competitive firms have total control over the price they set for their product." Explain why the previous statement is correct or incorrect.

In a perfectly competitive market in the short run, as the market demand increases, the firms ________ their output and their economic profit ________.

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

In perfect competition, each individual firm faces ________ demand curve.

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will

For a perfectly competitive firm, price is the same as

"A perfectly competitive firm will shut down if the price falls below its average total cost." Do you agree? Explain.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-In the above figure, if the firm increases its output from Q₂ to Q₃, it will

In a perfectly competitive market in the short run, as the market demand increases, the firms their output and their economic profit .

In the long-run equilibrium in a perfectly competitive market, the firms produce at the possible average total cost and the price equals the possible average total cost.