Question 1

A firm's shutdown point is the output and price at which the firm just covers its

Accepted Answer

A)  total fixed cost. 
B)  total variable cost. 
C)  total cost. 
D)  marginal cost. 
A)  total fixed cost. 
B)  total variable cost. 
C)  total cost. 
D)  marginal cost.

Question 2

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 3

In the short run, a firm will

Accepted Answer

A)  not produce if its total revenue does not cover its total cost. 
B)  produce and incur an economic loss if its total revenue covers its total variable cost but not its total cost. 
C)  produce and break even if its total revenue covers its total fixed cost but not its total variable cost. 
D)  produce and earn an economic profit if its total revenue is equal to its total cost. 
A)  not produce if its total revenue does not cover its total cost. 
B)  produce and incur an economic loss if its total revenue covers its total variable cost but not its total cost. 
C)  produce and break even if its total revenue covers its total fixed cost but not its total variable cost. 
D)  produce and earn an economic profit if its total revenue is equal to its total cost.

Question 4

In perfect competition, the elasticity of demand for the product of a single firm is

Accepted Answer

A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  infinite. 
A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  infinite.

Question 5

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

Accepted Answer

A)  because a perfectly competitive firm produces at the lowest possible long run average total cost 
B)  because a perfectly competitive firm produces where marginal revenue exceeds marginal cost 
C)  because a perfectly competitive firm is a price maker 
D)  because the goal of a perfectly competitive firm is to profit maximize 
A)  because a perfectly competitive firm produces at the lowest possible long run average total cost 
B)  because a perfectly competitive firm produces where marginal revenue exceeds marginal cost 
C)  because a perfectly competitive firm is a price maker 
D)  because the goal of a perfectly competitive firm is to profit maximize

Question 6

The marginal revenue curve for a perfectly competitive firm is

Accepted Answer

A)  an upward sloping curve. 
B)  a downward sloping curve. 
C)  a horizontal line. 
D)  None of the above answers is correct. 
A)  an upward sloping curve. 
B)  a downward sloping curve. 
C)  a horizontal line. 
D)  None of the above answers is correct.

Question 7

Suppose firms in a perfectly competitive market are earning an economic profit. As new firms enter, the price ________ and the economic profit of each existing 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 8

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

Accepted Answer

A)  30,000 bushels 
B)  60,000 bushels 
C)  80,000 bushels 
D)  All output levels occur between 30,000 and 80,000 bushels are profit-maximizing output levels. 
A)  30,000 bushels 
B)  60,000 bushels 
C)  80,000 bushels 
D)  All output levels occur between 30,000 and 80,000 bushels are profit-maximizing output levels.

Question 9

-In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce?

Accepted Answer

A)  0 
B)  5 
C)  20 
D)  30 
A)  0 
B)  5 
C)  20 
D)  30

Question 10

-In the above table, if the firm sells 5 units of output, its total revenue is

Accepted Answer

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

Question 11

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

Accepted Answer

A)  total cost exceeds its total revenue. 
B)  average total cost exceeds the price of the product. 
C)  marginal revenue is less than the price of the product. 
D)  marginal cost exceeds the price of the product. 
A)  total cost exceeds its total revenue. 
B)  average total cost exceeds the price of the product. 
C)  marginal revenue is less than the price of the product. 
D)  marginal cost exceeds the price of the product.

Question 12

A firm that shuts down and produces no output incurs a loss equal to its

Accepted Answer

A)  total fixed costs. 
B)  total variable costs. 
C)  marginal costs. 
D)  marginal revenue. 
A)  total fixed costs. 
B)  total variable costs. 
C)  marginal costs. 
D)  marginal revenue.

Question 13

-In the above figure, the vertical distance between the ATC and AVC curves is

Accepted Answer

A)  the marginal cost. 
B)  the total cost. 
C)  the average fixed costs. 
D)  None of the above answers is correct. 
A)  the marginal cost. 
B)  the total cost. 
C)  the average fixed costs. 
D)  None of the above answers is correct.

Question 14

The short-run supply curve for a perfectly competitive firm is its marginal cost curve

Accepted Answer

A)  above the horizontal axis. 
B)  above its shutdown point. 
C)  below its shutdown point. 
D)  everywhere. 
A)  above the horizontal axis. 
B)  above its shutdown point. 
C)  below its shutdown point. 
D)  everywhere.

Question 15

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal revenue is ________ per pound of cookies.

Accepted Answer

A)  $11 
B)  $15 
C)  $30 
D)  $45 
A)  $11 
B)  $15 
C)  $30 
D)  $45

Question 16

A worldwide hops (a flower 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 hops farmers out business, which gradually helped hops prices recover. Suppose farming hops is a perfectly competitive market. How did farmers going out of business help hops prices recover?

Accepted Answer

A)  Fewer farmers cause the market supply curve to shift leftward, causing price to rise. 
B)  Fewer farmers cause an increase in market demand, causing price to rise. 
C)  Fewer farmers cause an increase in the surviving firms' costs, causing higher prices. 
D)  Fewer farmers cause the individual firms' supply curves to decrease, causing higher prices. 
A)  Fewer farmers cause the market supply curve to shift leftward, causing price to rise. 
B)  Fewer farmers cause an increase in market demand, causing price to rise. 
C)  Fewer farmers cause an increase in the surviving firms' costs, causing higher prices. 
D)  Fewer farmers cause the individual firms' supply curves to decrease, causing higher prices.

Question 17

-In the above figure, by increasing its output from Q1 to Q2, 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 18

-In the above table, the firm's total fixed cost of production is

Accepted Answer

A)  $3.00. 
B)  $4.00. 
C)  $7.00. 
D)  $29.00. 
A)  $3.00. 
B)  $4.00. 
C)  $7.00. 
D)  $29.00.

Question 19

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

Accepted Answer

A)  200; $4,000; economic 
B)  300; $9,000; normal 
C)  200; $4,000; normal 
D)  300; $9,000; economic 
A)  200; $4,000; economic 
B)  300; $9,000; normal 
C)  200; $4,000; normal 
D)  300; $9,000; economic

Question 20

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

The presence of economic profit attracts

A firm's shutdown point is the output and price at which the firm just covers its

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

In the short run, a firm will

In perfect competition, the elasticity of demand for the product of a single firm is

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

The marginal revenue curve for a perfectly competitive firm is

Suppose firms in a perfectly competitive market are earning an economic profit. As new firms enter, the price and the economic profit of each existing firm .

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

-In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-In the above table, if the firm sells 5 units of output, its total revenue is

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

A firm that shuts down and produces no output incurs a loss equal to its

-In the above figure, the vertical distance between the ATC and AVC curves is

The short-run supply curve for a perfectly competitive firm is its marginal cost curve

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal revenue is ________ per pound of cookies.

-In the above figure, by increasing its output from Q₁ to Q₂, the firm

-In the above table, the firm's total fixed cost of production is

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces frames each week, makes of total revenue, and makes zero profit.

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

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

A firm's shutdown point is the output and price at which the firm just covers its

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

In the short run, a firm will

In perfect competition, the elasticity of demand for the product of a single firm is

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

The marginal revenue curve for a perfectly competitive firm is

Suppose firms in a perfectly competitive market are earning an economic profit. As new firms enter, the price ________ and the economic profit of each existing firm ________.

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

-In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-In the above table, if the firm sells 5 units of output, its total revenue is

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

A firm that shuts down and produces no output incurs a loss equal to its

-In the above figure, the vertical distance between the ATC and AVC curves is

The short-run supply curve for a perfectly competitive firm is its marginal cost curve

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal revenue is ________ per pound of cookies.

-In the above figure, by increasing its output from Q1 to Q2, the firm

-In the above table, the firm's total fixed cost of production is

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

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 earning an economic profit. As new firms enter, the price and the economic profit of each existing firm .

-In the above figure, by increasing its output from Q₁ to Q₂, the firm

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces frames each week, makes of total revenue, and makes zero profit.