Question 1

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, the firm will

Accepted Answer

A)  shut down. 
B)  leave the market in the long run. 
C)  stay in the market in the long run. 
D)  make an economic profit. 
A)  shut down. 
B)  leave the market in the long run. 
C)  stay in the market in the long run. 
D)  make an economic profit.

Question 2

-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 the market price does NOT change, Evan's will

Accepted Answer

A)  continue to operate in the short run, but will exit the industry in the long run. 
B)  continue to operate in the short run and in the long run. 
C)  shut down. 
D)  increase its production in the long run. 
A)  continue to operate in the short run, but will exit the industry in the long run. 
B)  continue to operate in the short run and in the long run. 
C)  shut down. 
D)  increase its production in the long run.

Question 3

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

Accepted Answer

A) True 
 B)False

Question 4

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

Accepted Answer

A)  from 0 to 30,000 bushels 
B)  from 0 to 60,000 bushels 
C)  between 30,000 and 80,000 bushels 
D)  over 80,000 bushels 
A)  from 0 to 30,000 bushels 
B)  from 0 to 60,000 bushels 
C)  between 30,000 and 80,000 bushels 
D)  over 80,000 bushels

Question 5

-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P1, in the long run the market

Accepted Answer

A)  demand will increase. 
B)  demand will decrease. 
C)  supply will increase. 
D)  supply will decrease. 
A)  demand will increase. 
B)  demand will decrease. 
C)  supply will increase. 
D)  supply will decrease.

Question 6

For a perfectly competitive firm, the shutdown point is the

Accepted Answer

A)  amount of output at which price equals minimum average variable cost. 
B)  amount of output at which price equals minimum average total cost. 
C)  price at which economic profit is zero. 
D)  price at which total opportunity cost is zero. 
A)  amount of output at which price equals minimum average variable cost. 
B)  amount of output at which price equals minimum average total cost. 
C)  price at which economic profit is zero. 
D)  price at which total opportunity cost is zero.

Question 7

Which of the following is NOT an assumption of perfect competition?

Accepted Answer

A)  many firms 
B)  many buyers 
C)  restrictions on entry into the market 
D)  each firm sells an identical product 
A)  many firms 
B)  many buyers 
C)  restrictions on entry into the market 
D)  each firm sells an identical product

Question 8

A perfectly competitive firm maximizes its profits by producing the amount of output such that

Accepted Answer

A)  MR = P. 
B)  MR = MC. 
C)  P = AVC. 
D)  P = ATC. 
A)  MR = P. 
B)  MR = MC. 
C)  P = AVC. 
D)  P = ATC.

Question 9

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

Accepted Answer

A) True 
 B)False

Question 10

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

Accepted Answer

A)  $4 per unit. 
B)  $8 per unit. 
C)  $12 per unit. 
D)  $16 per unit. 
A)  $4 per unit. 
B)  $8 per unit. 
C)  $12 per unit. 
D)  $16 per unit.

Question 11

Suppose the bobby pin industry is perfectly competitive. The price of a packet of bobby pins is $2.00. Pins and Needles, Inc. is a firm in this industry and is producing 1,000 packets of bobby pins per day at the point where the MC = MR. The average cost of production at this output level is $1.50 per packet.
a) What is the marginal cost of the 1,000th packet?
b) Is this firm making an economic profit, zero economical profit, or an economic loss? How much?
c) Is the firm in long-run equilibrium? Why or why not?

Accepted Answer

a) The price per packet is $2, which is

Question 12

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Accepted Answer

A)  $15. 
B)  $30. 
C)  $75. 
D)  $90. 
A)  $15. 
B)  $30. 
C)  $75. 
D)  $90.

Question 13

Do firms in perfect competition advertise their products? Why or why not?

Accepted Answer

Firms in perfect competition do not adve

Question 14

In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

Accepted Answer

A)  few buyers and sellers. 
B)  no barriers to entry and exit. 
C)  price taking by the firms. 
D)  firms with perfectly elastic market demand. 
A)  few buyers and sellers. 
B)  no barriers to entry and exit. 
C)  price taking by the firms. 
D)  firms with perfectly elastic market demand.

Question 15

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

The profit maximizing level of output is

Question 16

-The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

Accepted Answer

A)  20 units of output and makes zero economic profit. 
B)  20 units of output and incurs an economic loss. 
C)  10 units of output and makes zero economic profit. 
D)  10 units of output and incurs an economic loss. 
A)  20 units of output and makes zero economic profit. 
B)  20 units of output and incurs an economic loss. 
C)  10 units of output and makes zero economic profit. 
D)  10 units of output and incurs an economic loss.

Question 17

If the price of its product just equals the average variable cost of production for a competitive firm

Accepted Answer

A)  total revenue equals total fixed cost and the firm's loss equals total variable cost. 
B)  total revenue equals total variable cost and the firm's loss equals total fixed cost. 
C)  total fixed cost is zero. 
D)  total variable cost equals total fixed cost. 
A)  total revenue equals total fixed cost and the firm's loss equals total variable cost. 
B)  total revenue equals total variable cost and the firm's loss equals total fixed cost. 
C)  total fixed cost is zero. 
D)  total variable cost equals total fixed cost.

Question 18

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.

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 19

In the long run, perfectly competitive firms cannot earn an economic profit.

Accepted Answer

A) True 
 B)False

Question 20

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his economic loss 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.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, the firm will

-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 the market price does NOT change, Evan's will

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P₁, in the long run the market

For a perfectly competitive firm, the shutdown point is the

Which of the following is NOT an assumption of perfect competition?

A perfectly competitive firm maximizes its profits by producing the amount of output such that

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Do firms in perfect competition advertise their products? Why or why not?

In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

-The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

If the price of its product just equals the average variable cost of production for a competitive firm

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good and the economic loss of each remaining firm .

In the long run, perfectly competitive firms cannot earn an economic profit.

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

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

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, the firm will

-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 the market price does NOT change, Evan's will

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P1, in the long run the market

For a perfectly competitive firm, the shutdown point is the

Which of the following is NOT an assumption of perfect competition?

A perfectly competitive firm maximizes its profits by producing the amount of output such that

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Do firms in perfect competition advertise their products? Why or why not?

In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

-The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

If the price of its product just equals the average variable cost of production for a competitive firm

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.

In the long run, perfectly competitive firms cannot earn an economic profit.

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

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 the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P₁, in the long run the market

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good and the economic loss of each remaining firm .