Question 1

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

Accepted Answer

The price will not change. Any one perfe

Question 2

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price ________ and the economic loss of the surviving firms ________.

Accepted Answer

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

Question 3

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

Accepted Answer

A)  shut down because he incurs an economic loss. 
B)  shut down because the price is below his minimum average variable cost. 
C)  stay open because he makes an economic profit. 
D)  stay open because the price is above his minimum average variable cost. 
A)  shut down because he incurs an economic loss. 
B)  shut down because the price is below his minimum average variable cost. 
C)  stay open because he makes an economic profit. 
D)  stay open because the price is above his minimum average variable cost.

Question 4

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

Accepted Answer

If the market price rises, a p

Question 5

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

Accepted Answer

A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down. 
A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down.

Question 6

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

Accepted Answer

A)  below the market price. 
B)  at the market price. 
C)  above the market price. 
D)  below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic. 
A)  below the market price. 
B)  at the market price. 
C)  above the market price. 
D)  below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.

Question 7

In the short run, a perfectly competitive firm can

Accepted Answer

A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, zero economic profit, or incur an economic loss. 
A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, zero economic profit, or incur an economic loss.

Question 8

An individual perfectly competitive firm has a supply curve

Accepted Answer

A)  with a positive slope. 
B)  with a negative slope. 
C)  that is parallel to the quantity axis. 
D)  that has a positive slope at lower output levels and a negative slope at higher output levels. 
A)  with a positive slope. 
B)  with a negative slope. 
C)  that is parallel to the quantity axis. 
D)  that has a positive slope at lower output levels and a negative slope at higher output levels.

Question 9

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

Accepted Answer

A)  the price falling in the short run. 
B)  the firms' economic profits falling in the short run. 
C)  firms leaving the industry in the long run. 
D)  none of the events listed above. 
A)  the price falling in the short run. 
B)  the firms' economic profits falling in the short run. 
C)  firms leaving the industry in the long run. 
D)  none of the events listed above.

Question 10

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

Accepted Answer

A)  $11.00. 
B)  $12.00. 
C)  $16.00. 
D)  $22.00. 
A)  $11.00. 
B)  $12.00. 
C)  $16.00. 
D)  $22.00.

Question 11

-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. If Evan's sells the 5th sandwich, the marginal cost is ________ the marginal revenue, so the firm's profit ________.

Accepted Answer

A)  greater than; decreases 
B)  greater than; increases 
C)  less than; increases 
D)  less than; decreases 
A)  greater than; decreases 
B)  greater than; increases 
C)  less than; increases 
D)  less than; decreases

Question 12

-In the above figure, if the price is P1, the firm maximizes its profit by producing

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 13

In the long run, a perfectly competitive firm can

Accepted Answer

A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, make zero economic profit, or incur an economic loss. 
A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, make zero economic profit, or incur an economic loss.

Question 14

A perfectly competitive firm maximizes its profit by producing the level of output so that its average total cost equals the market price.

Accepted Answer

A) True 
 B)False

Question 15

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $1,200. 
D)  $4,000. 
A)  $0. 
B)  $1,000. 
C)  $1,200. 
D)  $4,000.

Question 16

-The market for milk is perfectly competitive. There are 1,000 farms in the industry and the relationship between a typical farm's output and total costs is the same as in Problem 2. The market demand schedule for milk is shown in the table above.
a) What is a typical farm's supply schedule and what is the market supply schedule?
b) What is the market price? What quantity of milk is sold?
c) What is the output produced by each farm? What type of profit or loss is made by each farm?
d) Do farms enter or exit the market?

Accepted Answer

@#IMG-DLM& a) A typical farm's supply schedule is

Question 17

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 2 cents per page. With no change in demand and technology, in the long run, the price will

Accepted Answer

A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  rise to 4 cents per page. 
D)  fall to 1 cent per page. 
A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  rise to 4 cents per page. 
D)  fall to 1 cent per page.

Question 18

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

Accepted Answer

A)  $4 per unit 
B)  $10 per unit 
C)  $12 per unit 
D)  $16 per unit 
A)  $4 per unit 
B)  $10 per unit 
C)  $12 per unit 
D)  $16 per unit

Question 19

If there is a permanent decrease in demand in a perfectly competitive market, then there is an initial ________ in price and existing firms ________.

Accepted Answer

A)  rise; make an economic profit 
B)  rise; incur an economic loss 
C)  fall; make an economic profit 
D)  fall; incur an economic loss 
A)  rise; make an economic profit 
B)  rise; incur an economic loss 
C)  fall; make an economic profit 
D)  fall; incur an economic loss

Question 20

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

Accepted Answer

A)  determining the price it will set. 
B)  maximizing its revenues. 
C)  maximizing its profit. 
D)  establishing its shutdown point. 
A)  determining the price it will set. 
B)  maximizing its revenues. 
C)  maximizing its profit. 
D)  establishing its shutdown point.

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price and the economic loss of the surviving firms .

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

In the short run, a perfectly competitive firm can

An individual perfectly competitive firm has a supply curve

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

-In the above figure, if the price is P₁, the firm maximizes its profit by producing

In the long run, a perfectly competitive firm can

A perfectly competitive firm maximizes its profit by producing the level of output so that its average total cost equals the market price.

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 2 cents per page. With no change in demand and technology, in the long run, the price will

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

If there is a permanent decrease in demand in a perfectly competitive market, then there is an initial in price and existing firms .

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

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

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price ________ and the economic loss of the surviving firms ________.

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

In the short run, a perfectly competitive firm can

An individual perfectly competitive firm has a supply curve

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

-In the above figure, if the price is P1, the firm maximizes its profit by producing

In the long run, a perfectly competitive firm can

A perfectly competitive firm maximizes its profit by producing the level of output so that its average total cost equals the market price.

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 2 cents per page. With no change in demand and technology, in the long run, the price will

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

If there is a permanent decrease in demand in a perfectly competitive market, then there is an initial ________ in price and existing firms ________.

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

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

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price and the economic loss of the surviving firms .

-In the above figure, if the price is P₁, the firm maximizes its profit by producing

If there is a permanent decrease in demand in a perfectly competitive market, then there is an initial in price and existing firms .