Question 1

A perfectly competitive firm definitely will shut down in the short run if its price is below its average total cost.

Accepted Answer

A) True 
 B)False

Question 2

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________.

Accepted Answer

A)  increases; zero; price of apples will return to their original level 
B)  remains the same; zero; orchards will be replanted and growers will make normal profits 
C)  increases; zero; orchards will be replanted and economic profit will return to zero 
D)  increases; positive; orchards will be replanted and economic profit will return to zero 
A)  increases; zero; price of apples will return to their original level 
B)  remains the same; zero; orchards will be replanted and growers will make normal profits 
C)  increases; zero; orchards will be replanted and economic profit will return to zero 
D)  increases; positive; orchards will be replanted and economic profit will return to zero

Question 3

In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will

Accepted Answer

A)  immediately shut down for the short run. 
B)  be maximizing profits. 
C)  increase its output to increase its profit. 
D)  decrease its output to increase its profit. 
A)  immediately shut down for the short run. 
B)  be maximizing profits. 
C)  increase its output to increase its profit. 
D)  decrease its output to increase its profit.

Question 4

In the long run, for a perfectly competitive market, if economic profit is

Accepted Answer

A)  less than zero, then some firms will exit the market and the market supply curve will shift leftward. 
B)  greater than zero, then some firms will enter the market and the market supply curve will shift rightward. 
C)  equal to zero, then there is no entry or exit of firms into or out of the market. 
D)  All of the above answers are correct. 
A)  less than zero, then some firms will exit the market and the market supply curve will shift leftward. 
B)  greater than zero, then some firms will enter the market and the market supply curve will shift rightward. 
C)  equal to zero, then there is no entry or exit of firms into or out of the market. 
D)  All of the above answers are correct.

Question 5

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Accepted Answer

A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms 
A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms

Question 6

Marginal revenue is equal to

Accepted Answer

A)  total revenue divided by price. 
B)  the change in total revenue divided by total output. 
C)  the change in total revenue divided by the change in quantity sold. 
D)  price divided by quantity sold. 
A)  total revenue divided by price. 
B)  the change in total revenue divided by total output. 
C)  the change in total revenue divided by the change in quantity sold. 
D)  price divided by quantity sold.

Question 7

In the short run a perfectly competitive firm will

Accepted Answer

A)  never shut down. 
B)  shut down if P  AFC. 
A)  never shut down. 
B)  shut down if P  AFC.

Question 8

A perfectly competitive market is characterized by

Accepted Answer

A)  high barriers to entry. 
B)  firms that are price setters. 
C)  firms facing a downward sloping demand curve. 
D)  no restrictions on entry into the market. 
A)  high barriers to entry. 
B)  firms that are price setters. 
C)  firms facing a downward sloping demand curve. 
D)  no restrictions on entry into the market.

Question 9

-For a perfectly competitive firm, curve A in the above figure is the firm's

Accepted Answer

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

Question 10

In a perfectly competitive industry

Accepted Answer

A)  each firm sets its own price so that it is different from the prices of its competitors. 
B)  earning an economic profit is certain. 
C)  each firm is a price taker. 
D)  consumers band together to demand the lowest price possible. 
A)  each firm sets its own price so that it is different from the prices of its competitors. 
B)  earning an economic profit is certain. 
C)  each firm is a price taker. 
D)  consumers band together to demand the lowest price possible.

Question 11

In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit.

Accepted Answer

A) True 
 B)False

Question 12

Suppose a perfectly competitive market is in a long-run equilibrium when a permanent decrease in the market demand occurs. In the long run, which of the following definitely occurs?

Accepted Answer

A)  The price decreases. 
B)  The number of firms decreases. 
C)  The firms' marginal cost increases. 
D)  Marginal revenue increases. 
A)  The price decreases. 
B)  The number of firms decreases. 
C)  The firms' marginal cost increases. 
D)  Marginal revenue increases.

Question 13

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

Accepted Answer

A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  0 pizzas per hour 
A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  0 pizzas per hour

Question 14

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

Accepted Answer

A)  0 and 8 
B)  1 and 8 
C)  2 and 7 
D)  3 and 6 
A)  0 and 8 
B)  1 and 8 
C)  2 and 7 
D)  3 and 6

Question 15

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

Accepted Answer

A)  $12. 
B)  $17. 
C)  $8. 
D)  $2. 
A)  $12. 
B)  $17. 
C)  $8. 
D)  $2.

Question 16

A market is perfectly competitive if

Accepted Answer

A)  each firm in it can influence the price of its product. 
B)  there are many firms in it, each selling a slightly different product. 
C)  there are many firms in it, each selling an identical product. 
D)  there are few firms in the market. 
A)  each firm in it can influence the price of its product. 
B)  there are many firms in it, each selling a slightly different product. 
C)  there are many firms in it, each selling an identical product. 
D)  there are few firms in the market.

Question 17

Total economic profit is

Accepted Answer

A)  total revenue minus total opportunity cost. 
B)  total revenue divided by total cost. 
C)  marginal revenue minus marginal cost. 
D)  marginal revenue divided by marginal cost. 
A)  total revenue minus total opportunity cost. 
B)  total revenue divided by total cost. 
C)  marginal revenue minus marginal cost. 
D)  marginal revenue divided by marginal cost.

Question 18

Entry in a perfectly competitive market

Accepted Answer

A)  shifts the market supply curve rightward. 
B)  decreases the market price. 
C)  shifts the market supply curve leftward. 
D)  Both answers A and B are correct. 
A)  shifts the market supply curve rightward. 
B)  decreases the market price. 
C)  shifts the market supply curve leftward. 
D)  Both answers A and B are correct.

Question 19

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

Accepted Answer

There are thousands upon thousands of ho

Question 20

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

Accepted Answer

A)  It is the firm's marginal cost curve. 
B)  It is the upward-sloping part of the firm's marginal cost curve. 
C)  It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. 
D)  It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost. 
A)  It is the firm's marginal cost curve. 
B)  It is the upward-sloping part of the firm's marginal cost curve. 
C)  It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. 
D)  It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.

A perfectly competitive firm definitely will shut down in the short run if its price is below its average total cost.

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples and the remaining apple growers make economic profit. In the long run, the .

In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will

In the long run, for a perfectly competitive market, if economic profit is

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Marginal revenue is equal to

In the short run a perfectly competitive firm will

A perfectly competitive market is characterized by

-For a perfectly competitive firm, curve A in the above figure is the firm's

In a perfectly competitive industry

In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit.

Suppose a perfectly competitive market is in a long-run equilibrium when a permanent decrease in the market demand occurs. In the long run, which of the following definitely occurs?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

A market is perfectly competitive if

Total economic profit is

Entry in a perfectly competitive market

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

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

A perfectly competitive firm definitely will shut down in the short run if its price is below its average total cost.

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________.

In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will

In the long run, for a perfectly competitive market, if economic profit is

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Marginal revenue is equal to

In the short run a perfectly competitive firm will

A perfectly competitive market is characterized by

-For a perfectly competitive firm, curve A in the above figure is the firm's

In a perfectly competitive industry

In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit.

Suppose a perfectly competitive market is in a long-run equilibrium when a permanent decrease in the market demand occurs. In the long run, which of the following definitely occurs?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

A market is perfectly competitive if

Total economic profit is

Entry in a perfectly competitive market

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

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

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples and the remaining apple growers make economic profit. In the long run, the .