Question 1

Figure 10-3
​  
-In Figure 10-3, the perfectly competitive firm is realizing a

Accepted Answer

A) loss equal to ABCE. 
B) profit equal to ABCE. 
C) profit equal to ABDF. 
D) loss equal to ABDF. 
A) loss equal to ABCE. 
B) profit equal to ABCE. 
C) profit equal to ABDF. 
D) loss equal to ABDF.

Question 2

What makes the demand curve of the perfectly competitive firm uniquely different from that of firms in other kinds of market structures?

Accepted Answer

The perfectly competitive firm's demand

Question 3

Figure 10-1
​  
-If the perfectly competitive firm depicted in Figure 10-1 is currently producing at C, its profits

Accepted Answer

A) are equal to zero. 
B) are negative, that is, it is suffering a loss. 
C) are maximized. 
D) could be higher if the firm produced at D. 
A) are equal to zero. 
B) are negative, that is, it is suffering a loss. 
C) are maximized. 
D) could be higher if the firm produced at D.

Question 4

In perfectly competitive markets, firms operate where MC = MR and because of this, they are not making any economic profit.

Accepted Answer

A) True 
 B)False

Question 5

One of the following is not a characteristic of perfect competition.Which is it?

Accepted Answer

A) Firms advertise to increase their market share. 
B) Profits are low in the long run. 
C) Consumers pay little attention to brand names. 
D) Firms pay no attention to their competitors' output levels. 
A) Firms advertise to increase their market share. 
B) Profits are low in the long run. 
C) Consumers pay little attention to brand names. 
D) Firms pay no attention to their competitors' output levels.

Question 6

Figure 10-4
​  
-Figure 10-4 shows the industry's supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2).At S3, the firm is

Accepted Answer

A) going to shut down. 
B) incurring losses. 
C) earning zero economic profits. 
D) earning economic profit greater than zero. 
A) going to shut down. 
B) incurring losses. 
C) earning zero economic profits. 
D) earning economic profit greater than zero.

Question 7

Figure 10-1
​  
-If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

The difference between zero accounting profit and zero economic profit is that

Accepted Answer

A) an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital. 
B) an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm's capital. 
C) an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost. 
D) an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital. 
A) an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital. 
B) an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm's capital. 
C) an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost. 
D) an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.

Question 9

Which of the following most resembles a perfectly competitive market?

Accepted Answer

A) The stock market 
B) The publishing industry 
C) The steel industry 
D) The new car market 
A) The stock market 
B) The publishing industry 
C) The steel industry 
D) The new car market

Question 10

A price taking firm's short-run supply curve is perfectly elastic at the market price.

Accepted Answer

A) True 
 B)False

Question 11

In perfectly competitive markets, some buyers do not have full information about the products available.

Accepted Answer

A) True 
 B)False

Question 12

Table 10-1  
-In Table 10-1 are the short-run cost schedules of a perfectly competitive firm.If the market price of output is $50, the firm will produce ____ units and earn a profit of ____.

Accepted Answer

A) 6; $187.02 
B) 6; $48 
C) 8; $154.96 
D) 8; $245.04 
A) 6; $187.02 
B) 6; $48 
C) 8; $154.96 
D) 8; $245.04

Question 13

In the long run, a perfectly competitive industry tends to develop differentiated products.

Accepted Answer

A) True 
 B)False

Question 14

In short-run equilibrium, a perfectly competitive firm

Accepted Answer

A) may earn a profit or a loss. 
B) always earns a profit. 
C) never earns a profit. 
D) earns a profit only if the firm has no fixed cost. 
A) may earn a profit or a loss. 
B) always earns a profit. 
C) never earns a profit. 
D) earns a profit only if the firm has no fixed cost.

Question 15

A perfectly competitive firm may, under some circumstances, be able to affect the market price.

Accepted Answer

A) True 
 B)False

Question 16

If the objective of economic policy is to decrease the amount of pollution by an industry in the long run, the

Accepted Answer

A) most effective policy action would be a subsidy to firms for the reduction of emissions. 
B) most effective policy action would be a tax on polluting firms. 
C) appropriate course of action for government is to do nothing. 
D) appropriate course of action for government is to increase R&D outlays to develop technology to remove the emissions from the environment. 
A) most effective policy action would be a subsidy to firms for the reduction of emissions. 
B) most effective policy action would be a tax on polluting firms. 
C) appropriate course of action for government is to do nothing. 
D) appropriate course of action for government is to increase R&D outlays to develop technology to remove the emissions from the environment.

Question 17

In the short run, a perfectly competitive firm can either make a profit or exit the market.

Accepted Answer

A) True 
 B)False

Question 18

Figure 10-5
​  
-The short run for the industry is defined as a period

Accepted Answer

A) too brief for new firms to enter the industry. 
B) too brief for old firms to leave the industry. 
C) in which the number of firms in the industry is fixed. 
D) All of the responses are correct. 
A) too brief for new firms to enter the industry. 
B) too brief for old firms to leave the industry. 
C) in which the number of firms in the industry is fixed. 
D) All of the responses are correct.

Question 19

Figure 10-5
​  
-Figure 10-5 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.At point C, the firm would

Accepted Answer

A) earn zero economic profit. 
B) earn negative economic profit. 
C) have a zero opportunity cost of capital. 
D) have a negative opportunity cost of capital. 
A) earn zero economic profit. 
B) earn negative economic profit. 
C) have a zero opportunity cost of capital. 
D) have a negative opportunity cost of capital.

Exam 10: The Firm and the Industry Under Perfect Competition

Figure 10-3 ​ -In Figure 10-3, the perfectly competitive firm is realizing a

What makes the demand curve of the perfectly competitive firm uniquely different from that of firms in other kinds of market structures?

Figure 10-1 ​ -If the perfectly competitive firm depicted in Figure 10-1 is currently producing at C, its profits

In perfectly competitive markets, firms operate where MC = MR and because of this, they are not making any economic profit.

One of the following is not a characteristic of perfect competition.Which is it?

Figure 10-4 ​ -Figure 10-4 shows the industry's supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2).At S3, the firm is

Figure 10-1 ​ -If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?

The difference between zero accounting profit and zero economic profit is that

Which of the following most resembles a perfectly competitive market?

A price taking firm's short-run supply curve is perfectly elastic at the market price.

In perfectly competitive markets, some buyers do not have full information about the products available.

Table 10-1 -In Table 10-1 are the short-run cost schedules of a perfectly competitive firm.If the market price of output is $50, the firm will produce ____ units and earn a profit of ____.

In the long run, a perfectly competitive industry tends to develop differentiated products.

In short-run equilibrium, a perfectly competitive firm

A perfectly competitive firm may, under some circumstances, be able to affect the market price.

If the objective of economic policy is to decrease the amount of pollution by an industry in the long run, the

In the short run, a perfectly competitive firm can either make a profit or exit the market.

Figure 10-5 ​ -The short run for the industry is defined as a period

Figure 10-5 ​ -Figure 10-5 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.At point C, the firm would

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 10-3 -In Figure 10-3, the perfectly competitive firm is realizing a

Figure 10-1 -If the perfectly competitive firm depicted in Figure 10-1 is currently producing at C, its profits

Figure 10-4 -Figure 10-4 shows the industry's supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2).At S₃, the firm is

Figure 10-1 -If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?

Table 10-1 -In Table 10-1 are the short-run cost schedules of a perfectly competitive firm.If the market price of output is $50, the firm will produce units and earn a profit of .

Figure 10-5 -The short run for the industry is defined as a period

Figure 10-5 -Figure 10-5 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.At point C, the firm would