Question 1

-In the above figure, the firm is breaking even at points

Accepted Answer

A)  a and c. 
B)  b and d. 
C)  c and d. 
D)  a and d. 
A)  a and c. 
B)  b and d. 
C)  c and d. 
D)  a and d.

Question 2

-In the above figure, if the price is $12 per unit, how many units will a profit maximizing perfectly competitive firm produce?

Accepted Answer

A)  0 
B)  20 
C)  30 
D)  35 
A)  0 
B)  20 
C)  30 
D)  35

Question 3

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What quantity of sandwiches produced will maximize Evan's economic profit in the short run?

Accepted Answer

A)  2 sandwiches per hour 
B)  3 sandwiches per hour 
C)  4 sandwiches per hour 
D)  5 sandwiches per hour 
A)  2 sandwiches per hour 
B)  3 sandwiches per hour 
C)  4 sandwiches per hour 
D)  5 sandwiches per hour

Question 4

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

Accepted Answer

A)  $4 per unit. 
B)  $8 per unit. 
C)  $16 per unit. 
D)  None of the above answers is correct. 
A)  $4 per unit. 
B)  $8 per unit. 
C)  $16 per unit. 
D)  None of the above answers is correct.

Question 5

Which of the following is NOT present in a perfectly competitive market?

Accepted Answer

A)  profit maximizing firms 
B)  an economic profit in the long run 
C)  price taking behavior 
D)  identical products 
A)  profit maximizing firms 
B)  an economic profit in the long run 
C)  price taking behavior 
D)  identical products

Question 6

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

Accepted Answer

A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity. 
A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity.

Question 7

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

Accepted Answer

A)  zero 
B)  $2.50 per hour 
C)  $12.50 per hour 
D)  -$10.00 per hour 
A)  zero 
B)  $2.50 per hour 
C)  $12.50 per hour 
D)  -$10.00 per hour

Question 8

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is TRUE if the production of ethanol increases?

Accepted Answer

A)  Existing corn farmers will exit the market and decrease the market price. 
B)  New corn farmers will enter the market and increase the market price. 
C)  Existing corn farmers will exit the market and increase the market price. 
D)  New corn farmers will enter the market and decrease the market price. 
A)  Existing corn farmers will exit the market and decrease the market price. 
B)  New corn farmers will enter the market and increase the market price. 
C)  Existing corn farmers will exit the market and increase the market price. 
D)  New corn farmers will enter the market and decrease the market price.

Question 9

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A)  its marginal cost curve above the shutdown point. 
B)  its average total cost curve above the minimum of the average variable cost. 
C)  its average variable cost curve above the breakeven point. 
D)  horizontal at the market price. 
A)  its marginal cost curve above the shutdown point. 
B)  its average total cost curve above the minimum of the average variable cost. 
C)  its average variable cost curve above the breakeven point. 
D)  horizontal at the market price.

Question 10

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

Accepted Answer

A)  $15. 
B)  $30. 
C)  $90. 
D)  $105. 
A)  $15. 
B)  $30. 
C)  $90. 
D)  $105.

Question 11

In a perfectly competitive market

Accepted Answer

A)  each firm sets its own price so that it is different from its competitors. 
B)  an economic profit is certain. 
C)  each firm takes the good's price as given to it by the market. 
D)  consumers are persuaded by advertising. 
A)  each firm sets its own price so that it is different from its competitors. 
B)  an economic profit is certain. 
C)  each firm takes the good's price as given to it by the market. 
D)  consumers are persuaded by advertising.

Question 12

The difference between a perfectly competitive firm's total revenue and its total cost is

Accepted Answer

A)  always positive. 
B)  always negative. 
C)  always zero. 
D)  greatest at the profit-maximizing level of output. 
A)  always positive. 
B)  always negative. 
C)  always zero. 
D)  greatest at the profit-maximizing level of output.

Question 13

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. Suppose Surf's Up is a boogie board rental shop. What is the shape of Surf's Up's demand curve as compared to the market demand curve?

Accepted Answer

A)  Surf's Up's demand curve is vertical and the market demand curve is downward sloping. 
B)  Surf's Up's demand curve is horizontal and the market demand curve is upward sloping. 
C)  Surf's Up's demand curve is horizontal and the market demand curve is downward sloping. 
D)  Surf's Up's demand curve is vertical and the market demand curve is upward sloping. 
A)  Surf's Up's demand curve is vertical and the market demand curve is downward sloping. 
B)  Surf's Up's demand curve is horizontal and the market demand curve is upward sloping. 
C)  Surf's Up's demand curve is horizontal and the market demand curve is downward sloping. 
D)  Surf's Up's demand curve is vertical and the market demand curve is upward sloping.

Question 14

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

Accepted Answer

A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined. 
A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined.

Question 15

-Brennan's Farm produces and sells milk. The market for milk is perfectly competitive. The market price of milk is $2.50 per gallon. The relationship between the farm's output and total costs is shown in the table above.
a) Draw Brennan's average variable, average total, and marginal cost curves.
b) Use your graphs to find Brennan's profit-maximizing output.
c) If Brennan maximizes his profit, how much profit does he make?
d) Should Brennan stay in business? Will other farms with costs the same as Brennan's enter the milk market? Explain.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& a) Brennan's cost schedules are shown

Question 16

Fresno County, California is the largest agricultural producing county in the country and almonds are an important crop with more than 99,000 acres harvested. Each acre produces about a ton of almonds and sold at a price of $4300 a ton. The Sagardia Brothers grew 600 acres of almonds that year and they are price takers. What is the Brother's total revenue?

Accepted Answer

A)  $4300 
B)  $4900 
C)  $59.4 million 
D)  $2.58 million 
A)  $4300 
B)  $4900 
C)  $59.4 million 
D)  $2.58 million

Question 17

A perfectly competitive industry is in long-run equilibrium. Some firms in the industry adopt new technology that reduces the average total cost of producing the good. In the long run, the price is ________, firms with the new technology make ________ economic profit, and firms with the old technology ________.

Accepted Answer

A)  lower; zero; exit the industry 
B)  constant; a positive; make zero economic profit 
C)  lower; zero; switch to the new technology or exit the industry 
D)  constant; zero; exit the industry 
A)  lower; zero; exit the industry 
B)  constant; a positive; make zero economic profit 
C)  lower; zero; switch to the new technology or exit the industry 
D)  constant; zero; exit the industry

Question 18

-In the above figure, the firm is incurring an economic loss at

Accepted Answer

A)  point a. 
B)  point c. 
C)  points b and d. 
D)  points a, b, and d. 
A)  point a. 
B)  point c. 
C)  points b and d. 
D)  points a, b, and d.

Question 19

-In the above figure, if the price is P1, the firm will produce

Accepted Answer

A)  nothing. 
B)  where MC equals ATC. 
C)  where MC equals P1. 
D)  where ATC equals P1. 
A)  nothing. 
B)  where MC equals ATC. 
C)  where MC equals P1. 
D)  where ATC equals P1.

Question 20

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

Accepted Answer

A)  firm has total revenue of $2,720. 
B)  firm's total costs are less than $2,720. 
C)  firm is making an economic profit. 
D)  All of the above are true. 
A)  firm has total revenue of $2,720. 
B)  firm's total costs are less than $2,720. 
C)  firm is making an economic profit. 
D)  All of the above are true.

-In the above figure, the firm is breaking even at points

-In the above figure, if the price is $12 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What quantity of sandwiches produced will maximize Evan's economic profit in the short run?

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

Which of the following is NOT present in a perfectly competitive market?

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is TRUE if the production of ethanol increases?

A perfectly competitive firm's short-run supply curve is

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

In a perfectly competitive market

The difference between a perfectly competitive firm's total revenue and its total cost is

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

A perfectly competitive industry is in long-run equilibrium. Some firms in the industry adopt new technology that reduces the average total cost of producing the good. In the long run, the price is , firms with the new technology make economic profit, and firms with the old technology .

-In the above figure, the firm is incurring an economic loss at

-In the above figure, if the price is P₁, the firm will produce

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

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, the firm is breaking even at points

-In the above figure, if the price is $12 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What quantity of sandwiches produced will maximize Evan's economic profit in the short run?

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

Which of the following is NOT present in a perfectly competitive market?

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is TRUE if the production of ethanol increases?

A perfectly competitive firm's short-run supply curve is

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

In a perfectly competitive market

The difference between a perfectly competitive firm's total revenue and its total cost is

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

-In the above figure, the firm is incurring an economic loss at

-In the above figure, if the price is P1, the firm will produce

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

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 price is P₁, the firm will produce