Question 1

In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  increasing. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  increasing.

Question 2

-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

Accepted Answer

Jimmy's profit is greatest if he grows e

Question 3

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is TRUE?

Accepted Answer

A)  The firm's average cost exceeds the price. 
B)  Over time, firms will enter this industry. 
C)  The firm is earning economic profit. 
D)  None of the above is true. 
A)  The firm's average cost exceeds the price. 
B)  Over time, firms will enter this industry. 
C)  The firm is earning economic profit. 
D)  None of the above is true.

Question 4

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Accepted Answer

A)  consumers get to see a variety of outputs. 
B)  there are many buyers. 
C)  the economic profit will be positive in the long run. 
D)  firms are price takers. 
A)  consumers get to see a variety of outputs. 
B)  there are many buyers. 
C)  the economic profit will be positive in the long run. 
D)  firms are price takers.

Question 5

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________.

Accepted Answer

A)  exit; covering only their total fixed costs 
B)  enter; making zero economic profit 
C)  exit; producing at the minimum point on their long-run average cost curve 
D)  enter; making zero normal profit 
A)  exit; covering only their total fixed costs 
B)  enter; making zero economic profit 
C)  exit; producing at the minimum point on their long-run average cost curve 
D)  enter; making zero normal profit

Question 6

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Accepted Answer

A)  $2.50 
B)  $2.00 
C)  $3.00 
D)  $3.50 
A)  $2.50 
B)  $2.00 
C)  $3.00 
D)  $3.50

Question 7

Entry of new firms into a perfectly competitive market raises the product's price.

Accepted Answer

A) True 
 B)False

Question 8

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 9

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

Accepted Answer

A)  average total cost. 
B)  average marginal cost. 
C)  average variable cost. 
D)  wage rate. 
A)  average total cost. 
B)  average marginal cost. 
C)  average variable cost. 
D)  wage rate.

Question 10

-The above figure shows the cost curves of a profit-maximizing perfectly competitive firm. If the price equals $7
a) how much will the firm produce?
b) how much is the firm's average total, average variable, and marginal costs?
c) how much is the firm's total, total variable, and total fixed costs?
d) how much is the firm's total revenue and economic profit?
e) what will happen in this market in the long run?

Accepted Answer

a) The firm will produce 40 units of out

Question 11

Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell

Accepted Answer

A)  one printer a day. 
B)  two printers a day. 
C)  three printers a day. 
D)  more than three printers a day. 
A)  one printer a day. 
B)  two printers a day. 
C)  three printers a day. 
D)  more than three printers a day.

Question 12

-In the above table, the marginal revenue from the fourth unit of output is

Accepted Answer

A)  $30. 
B)  $147. 
C)  $150. 
D)  $180. 
A)  $30. 
B)  $147. 
C)  $150. 
D)  $180.

Question 13

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

Accepted Answer

A)  The demand curve for individual corn farmers will shift upward. 
B)  The price individual corn farmers receive will decrease. 
C)  The total cost curve for individual corn farmers will shift upward. 
D)  The marginal cost curve for individual corn farmers will shift downward. 
A)  The demand curve for individual corn farmers will shift upward. 
B)  The price individual corn farmers receive will decrease. 
C)  The total cost curve for individual corn farmers will shift upward. 
D)  The marginal cost curve for individual corn farmers will shift downward.

Question 14

The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishing boat

Accepted Answer

A)  is less than the elasticity of demand for fish overall. 
B)  equals the elasticity of demand for fish overall. 
C)  is greater than the elasticity of demand for fish overall. 
D)  is sometimes greater than and sometimes less than the elasticity of demand for fish overall. 
A)  is less than the elasticity of demand for fish overall. 
B)  equals the elasticity of demand for fish overall. 
C)  is greater than the elasticity of demand for fish overall. 
D)  is sometimes greater than and sometimes less than the elasticity of demand for fish overall.

Question 15

-Cory's is one of many ice cream stands in town. Cory's costs are shown in the table above.
a) If the market price of ice cream is $1.75 per cone, what is Cory's profit-maximizing quantity of cones?
b) If the market price of ice cream is $2.25 per cone, what is Cory's profit-maximizing quantity of coins?
c) If the market price of ice cream is $2.75 per cone, what is Cory's profit-maximizing quantity of coins?
d) Can you determine any points on Cory's supply curve?

Accepted Answer

@#IMG-DLM& a) Cory's profit is maximized when his

Question 16

Firms in perfectly competitive industries have a ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a ________.

Accepted Answer

A)  horizontal; price taker 
B)  downward sloping; price maker 
C)  vertical; price taker 
D)  downward sloping; price taker 
A)  horizontal; price taker 
B)  downward sloping; price maker 
C)  vertical; price taker 
D)  downward sloping; price taker

Question 17

In the short run, a perfectly competitive firm

Accepted Answer

A)  shuts down if it incurs any economic loss. 
B)  incurs an economic loss if it shuts down. 
C)  does not consider total revenue in its shut down decision. 
D)  can earn a small economic profit while being shut down. 
A)  shuts down if it incurs any economic loss. 
B)  incurs an economic loss if it shuts down. 
C)  does not consider total revenue in its shut down decision. 
D)  can earn a small economic profit while being shut down.

Question 18

-In the above figure, by increasing its output from Q2 to Q3, the firm

Accepted Answer

A)  reduces its marginal revenue. 
B)  increases its marginal revenue. 
C)  decreases its profit. 
D)  increases its profit. 
A)  reduces its marginal revenue. 
B)  increases its marginal revenue. 
C)  decreases its profit. 
D)  increases its profit.

Question 19

A perfectly competitive firm is definitely making an economic profit when

Accepted Answer

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

Question 20

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve ________, the market price ________, and each firm's economic profit ________.

Accepted Answer

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

In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is TRUE?

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will the market until all firms in the market are .

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Entry of new firms into a perfectly competitive market raises the product's price.

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

-In the above table, the marginal revenue from the fourth unit of output is

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

The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishing boat

Firms in perfectly competitive industries have a individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a .

In the short run, a perfectly competitive firm

-In the above figure, by increasing its output from Q₂ to Q₃, the firm

A perfectly competitive firm is definitely making an economic profit when

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve , the market price , and each firm's economic profit .

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 long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is TRUE?

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________.

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Entry of new firms into a perfectly competitive market raises the product's price.

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum

-In the above table, the marginal revenue from the fourth unit of output is

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

The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishing boat

Firms in perfectly competitive industries have a ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a ________.

In the short run, a perfectly competitive firm

-In the above figure, by increasing its output from Q2 to Q3, the firm

A perfectly competitive firm is definitely making an economic profit when

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve ________, the market price ________, and each firm's economic profit ________.

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

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will the market until all firms in the market are .

Firms in perfectly competitive industries have a individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a .

-In the above figure, by increasing its output from Q₂ to Q₃, the firm

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve , the market price , and each firm's economic profit .