Question 1

-The figure above shows a firm in a perfectly competitive market. If the price rises from P3 to P4 then output will increase by

Accepted Answer

A)  0 units. 
B)  1 unit. 
C)  2 units. 
D)  3 units. 
A)  0 units. 
B)  1 unit. 
C)  2 units. 
D)  3 units.

Question 2

-Based on the table above, what is the marginal revenue of the tenth unit of output?

Accepted Answer

A)  $190 
B)  $100 
C)  $10 
D)  $9 
A)  $190 
B)  $100 
C)  $10 
D)  $9

Question 3

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is $3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to $2.50 per bushel. In the new short-run equilibrium, the farm

Accepted Answer

A)  incurs an economic loss of between $1 and $40,000. 
B)  makes zero economic profit. 
C)  incurs an economic loss of between $40,001 and $130,000. 
D)  incurs an economic loss of more than $130,001. 
A)  incurs an economic loss of between $1 and $40,000. 
B)  makes zero economic profit. 
C)  incurs an economic loss of between $40,001 and $130,000. 
D)  incurs an economic loss of more than $130,001.

Question 4

-In the above table, the average variable cost at 2 units of output is

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80. 
A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80.

Question 5

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

Accepted Answer

A)  total revenue equals total variable cost. 
B)  marginal revenue equals marginal cost. 
C)  total revenue equals total cost. 
D)  marginal revenue is equal to total revenue. 
A)  total revenue equals total variable cost. 
B)  marginal revenue equals marginal cost. 
C)  total revenue equals total cost. 
D)  marginal revenue is equal to total revenue.

Question 6

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 7

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

Accepted Answer

A)  marginal revenue is zero. 
B)  total revenue is as large as possible. 
C)  total revenue if it stayed open would be less than its total variable costs. 
D)  total revenue if it stayed open is less than its total cost but greater than its total fixed costs. 
A)  marginal revenue is zero. 
B)  total revenue is as large as possible. 
C)  total revenue if it stayed open would be less than its total variable costs. 
D)  total revenue if it stayed open is less than its total cost but greater than its total fixed costs.

Question 8

A perfectly competitive firm's short-run supply curve is the same as its

Accepted Answer

A)  ATC curve. 
B)  MR curve. 
C)  AVC curve. 
D)  MC curve above the minimum of the AVC curve. 
A)  ATC curve. 
B)  MR curve. 
C)  AVC curve. 
D)  MC curve above the minimum of the AVC curve.

Question 9

Does a perfectly competitive producer have any incentive to undercut the current market price? Explain your answer

Accepted Answer

A perfectly competitive producer has no

Question 10

-In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

Accepted Answer

A)  5 
B)  20 
C)  30 
D)  35 
A)  5 
B)  20 
C)  30 
D)  35

Question 11

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit.
a) Find the profit maximizing level of output for this firm.
b) How much economic profit is the firm making?

Accepted Answer

@#IMG-DLM& a) Total revenue equals price times qua

Question 12

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 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 13

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure.
a) What is Farmer Brown's total revenue?
b) What is Farmer Brown's marginal revenue?

Accepted Answer

a) Total revenue = price × quantity. The

Question 14

Easy entry and exit ensure that perfectly competitive firms cannot make a long-run economic profit.

Accepted Answer

A) True 
 B)False

Question 15

In a perfectly competitive market, a permanent decrease in demand initially brings a lower price, economic

Accepted Answer

A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market. 
A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market.

Question 16

What is a normal profit?

Accepted Answer

A normal profit is the return

Question 17

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is false. A perfectly comp

Question 18

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. What happens in the short run?

Accepted Answer

A)  Firms will enter the market. 
B)  Some of the existing firms shut down. 
C)  The firms decrease production. 
D)  The firms increase production. 
A)  Firms will enter the market. 
B)  Some of the existing firms shut down. 
C)  The firms decrease production. 
D)  The firms increase production.

Question 19

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. In what type of market does the Sagardia Brother operate?

Accepted Answer

A)  perfect competition 
B)  monopoly 
C)  oligopoly 
D)  monopolistic competition 
A)  perfect competition 
B)  monopoly 
C)  oligopoly 
D)  monopolistic competition

Question 20

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will incur economic losses?

Accepted Answer

A)  below 80,000 bushels 
B)  from 30,000 to 80,000 bushels 
C)  below 30,000 bushels and over 80,000 bushels 
D)  at 30,000 bushels and at 80,000 bushels 
A)  below 80,000 bushels 
B)  from 30,000 to 80,000 bushels 
C)  below 30,000 bushels and over 80,000 bushels 
D)  at 30,000 bushels and at 80,000 bushels

-The figure above shows a firm in a perfectly competitive market. If the price rises from P₃ to P₄ then output will increase by

-Based on the table above, what is the marginal revenue of the tenth unit of output?

-In the above table, the average variable cost at 2 units of output is

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

A perfectly competitive firm's short-run supply curve is the same as its

Does a perfectly competitive producer have any incentive to undercut the current market price? Explain your answer

-In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a) Find the profit maximizing level of output for this firm. b) How much economic profit is the firm making?

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a) What is Farmer Brown's total revenue? b) What is Farmer Brown's marginal revenue?

Easy entry and exit ensure that perfectly competitive firms cannot make a long-run economic profit.

In a perfectly competitive market, a permanent decrease in demand initially brings a lower price, economic

What is a normal profit?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. What happens in the short run?

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will incur economic losses?

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

-The figure above shows a firm in a perfectly competitive market. If the price rises from P3 to P4 then output will increase by

-Based on the table above, what is the marginal revenue of the tenth unit of output?

-In the above table, the average variable cost at 2 units of output is

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

A perfectly competitive firm's short-run supply curve is the same as its

Does a perfectly competitive producer have any incentive to undercut the current market price? Explain your answer

-In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a) Find the profit maximizing level of output for this firm. b) How much economic profit is the firm making?

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a) What is Farmer Brown's total revenue? b) What is Farmer Brown's marginal revenue?

Easy entry and exit ensure that perfectly competitive firms cannot make a long-run economic profit.

In a perfectly competitive market, a permanent decrease in demand initially brings a lower price, economic

What is a normal profit?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. What happens in the short run?

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will incur economic losses?

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

-The figure above shows a firm in a perfectly competitive market. If the price rises from P₃ to P₄ then output will increase by