Question 1

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

Accepted Answer

A)  incurring an economic loss equal to $119.00. 
B)  incurring an economic loss equal to $123.50. 
C)  incurring an economic loss equal to $187.00. 
D)  making zero economic profit. 
A)  incurring an economic loss equal to $119.00. 
B)  incurring an economic loss equal to $123.50. 
C)  incurring an economic loss equal to $187.00. 
D)  making zero economic profit.

Question 2

Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point.

Accepted Answer

The shutdown point is the point at which

Question 3

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's profit maximizing level of output?

Accepted Answer

A)  16 pages per hour 
B)  32 pages per hour 
C)  48 pages per hour 
D)  64 pages per hour 
A)  16 pages per hour 
B)  32 pages per hour 
C)  48 pages per hour 
D)  64 pages per hour

Question 4

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

Accepted Answer

A)  keep producing and incur an economic loss equal to its total variable cost. 
B)  keep producing and incur an economic loss equal to its total fixed cost. 
C)  shut down and incur an economic loss equal to its total variable cost. 
D)  shut down and incur an economic loss equal to its total fixed cost. 
A)  keep producing and incur an economic loss equal to its total variable cost. 
B)  keep producing and incur an economic loss equal to its total fixed cost. 
C)  shut down and incur an economic loss equal to its total variable cost. 
D)  shut down and incur an economic loss equal to its total fixed cost.

Question 5

A worldwide hops (a flowers used in brewing) shortage made stouts, ales and other specialty microbrews more pricy in 2008. Gayle Goshie, a hops farmer, blamed overproduction for hops' previously cheap place on the agricultural market. The glut pushed many hop farmers out business, which gradually helped hop prices recover. Suppose farming hops is a perfectly competitive market. Why would some hop farmers go out of business?

Accepted Answer

A)  because the price of hops was below the minimum of average fixed cost 
B)  because the price of hops was lower than the minimum of average variable cost 
C)  because the price of hops was higher than the minimum of average variable cost 
D)  because the price of hops was lower than the minimum of average total cost 
A)  because the price of hops was below the minimum of average fixed cost 
B)  because the price of hops was lower than the minimum of average variable cost 
C)  because the price of hops was higher than the minimum of average variable cost 
D)  because the price of hops was lower than the minimum of average total cost

Question 6

A worldwide hops (a flowers used in brewing) shortage made stouts, ales and other specialty microbrews more pricy in 2008. A triple whammy of bad weather in Europe, an increase in the price of barley and a decrease in hops production in the U.S. led to a price increase of 20 percent for the most widely grown varieties, to 80 percent for specialty hops. What is the effect of this hops shortage on a microbrewery's cost curves?

Accepted Answer

A)  Short run fixed costs would increase. 
B)  Short run total costs would decrease. 
C)  Short run average variable costs would decrease. 
D)  Short run variable costs would increase. 
A)  Short run fixed costs would increase. 
B)  Short run total costs would decrease. 
C)  Short run average variable costs would decrease. 
D)  Short run variable costs would increase.

Question 7

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

Accepted Answer

A)  shut down. 
B)  incur an economic loss but continue to operate. 
C)  make zero economic profit. 
D)  make an economic profit. 
A)  shut down. 
B)  incur an economic loss but continue to operate. 
C)  make zero economic profit. 
D)  make an economic profit.

Question 8

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. What is Archibald's shut-down point?

Accepted Answer

A)  $10.00 
B)  $16.67 
C)  $15.00 
D)  $12.50 
A)  $10.00 
B)  $16.67 
C)  $15.00 
D)  $12.50

Question 9

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?

Accepted Answer

Zero economic profits do not mean no pro

Question 10

Perfectly competitive firms are price takers.

Accepted Answer

A) True 
 B)False

Question 11

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

Accepted Answer

A)  fixed costs. 
B)  variable costs. 
C)  external costs. 
D)  depreciation due to machinery becoming obsolete. 
A)  fixed costs. 
B)  variable costs. 
C)  external costs. 
D)  depreciation due to machinery becoming obsolete.

Question 12

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

Accepted Answer

A)  $0 
B)  $30 
C)  -$10 
D)  -$15 
A)  $0 
B)  $30 
C)  -$10 
D)  -$15

Question 13

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

Accepted Answer

A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  earning enough revenue to pay all of its opportunity costs. 
A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  earning enough revenue to pay all of its opportunity costs.

Question 14

If firms in a perfectly competitive industry are making zero economic profit, then

Accepted Answer

A)  some of those firms will leave the industry, because firms cannot persistently go without making economic profit. 
B)  new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. 
C)  there is no incentive for either entry or exit. 
D)  some of the firms will temporarily shut down. 
A)  some of those firms will leave the industry, because firms cannot persistently go without making economic profit. 
B)  new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. 
C)  there is no incentive for either entry or exit. 
D)  some of the firms will temporarily shut down.

Question 15

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 16

The firm's supply curve is its

Accepted Answer

A)  marginal cost curve, at all points above the minimum average variable cost curve. 
B)  marginal cost curve, at all points above the minimum average fixed cost curve. 
C)  marginal cost curve, at all points above the minimum average total cost curve. 
D)  marginal revenue curve, at all points above the minimum average total cost curve. 
A)  marginal cost curve, at all points above the minimum average variable cost curve. 
B)  marginal cost curve, at all points above the minimum average fixed cost curve. 
C)  marginal cost curve, at all points above the minimum average total cost curve. 
D)  marginal revenue curve, at all points above the minimum average total cost curve.

Question 17

-In the above figure, if the firm increases its output from Q1 to Q2, 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 18

-Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why?

Accepted Answer

A)  shut down because the firm incurs an economic loss 
B)  stay in business because the firm is making an economic profit 
C)  stay in business because the firm's economic loss is less than fixed costs 
D)  stay in business because it is making zero economic profit 
A)  shut down because the firm incurs an economic loss 
B)  stay in business because the firm is making an economic profit 
C)  stay in business because the firm's economic loss is less than fixed costs 
D)  stay in business because it is making zero economic profit

Question 19

Which of the following is NOT a defining characteristic of perfectly competitive industries?

Accepted Answer

A)  many buyers and sellers 
B)  unrestricted entry and exit 
C)  consumer knowledge about prices charged by each firm 
D)  higher prices being charged for certain name brands 
A)  many buyers and sellers 
B)  unrestricted entry and exit 
C)  consumer knowledge about prices charged by each firm 
D)  higher prices being charged for certain name brands

Question 20

Which of the following is NOT an assumption of perfectly competitive markets?

Accepted Answer

A)  many buyers and many sellers 
B)  no restriction on entry 
C)  complete information about prices 
D)  new entrants have higher costs 
A)  many buyers and many sellers 
B)  no restriction on entry 
C)  complete information about prices 
D)  new entrants have higher costs

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point.

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's profit maximizing level of output?

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. What is Archibald's shut-down point?

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?

Perfectly competitive firms are price takers.

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

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

If firms in a perfectly competitive industry are making zero economic profit, then

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

The firm's supply curve is its

-In the above figure, if the firm increases its output from Q₁ to Q₂, it will

-Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why?

Which of the following is NOT a defining characteristic of perfectly competitive industries?

Which of the following is NOT an assumption of perfectly competitive markets?

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

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point.

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's profit maximizing level of output?

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. What is Archibald's shut-down point?

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?

Perfectly competitive firms are price takers.

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

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

If firms in a perfectly competitive industry are making zero economic profit, then

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

The firm's supply curve is its

-In the above figure, if the firm increases its output from Q1 to Q2, it will

-Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why?

Which of the following is NOT a defining characteristic of perfectly competitive industries?

Which of the following is NOT an assumption of perfectly competitive markets?

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 is

-In the above figure, if the firm increases its output from Q₁ to Q₂, it will