Question 1

In the long run, any firm may enter or leave a perfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 2

The short-run supply curve for a perfectly competitive firm is that portion of the MC curve above the AVC curve.

Accepted Answer

A) True 
 B)False

Question 3

For a firm in a perfectly competitive market, its short-run supply curve is that portion of the MC curve above where it intersects with the average total cost curve.

Accepted Answer

A) True 
 B)False

Question 4

A perfectly competitive firm can maximize profits by producing the quantity at which MR exceeds MC by the greatest amount.

Accepted Answer

A) True 
 B)False

Question 5

Why doesn't a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?

Accepted Answer

A perfectly competitive firm is producin

Question 6

The market for a perfectly competitive industry has an equilibrium price of $5 and the minimum average cost for the firms in this market is $3. In the long run, we would expect

Accepted Answer

A) each firm to produce less output than their current output. 
B) the number of firms to fall. 
C) each firm's profits to remain at $2 per unit. 
D) each firm's average cost to rise. 
A) each firm to produce less output than their current output. 
B) the number of firms to fall. 
C) each firm's profits to remain at $2 per unit. 
D) each firm's average cost to rise.

Question 7

Which of the following is closest to the economist's definition of perfect competition?

Accepted Answer

A) The airline industry 
B) The soft drink industry 
C) The fishing industry 
D) Cellular telephone service 
A) The airline industry 
B) The soft drink industry 
C) The fishing industry 
D) Cellular telephone service

Question 8

A perfectly competitive firm is a "price maker."

Accepted Answer

A) True 
 B)False

Question 9

Under perfect competition, regarding short-run profit, a firm may find itself losing money. This is true because

Accepted Answer

A) the firm was unable to pick the output that maximized profit. 
B) the market conditions make the highest possible profit a negative number. 
C) the demand for its product is strong. 
D) the firm could not produce enough output to make a profit. 
A) the firm was unable to pick the output that maximized profit. 
B) the market conditions make the highest possible profit a negative number. 
C) the demand for its product is strong. 
D) the firm could not produce enough output to make a profit.

Question 10

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 11

A firm can stay in business while taking a loss in the short run as long as it covers its

Accepted Answer

A) fixed costs. 
B) variable costs. 
C) fixed and variable costs. 
D) A firm can never stay in business when it experiences losses. 
A) fixed costs. 
B) variable costs. 
C) fixed and variable costs. 
D) A firm can never stay in business when it experiences losses.

Question 12

As long as TVC

Accepted Answer

A) True 
 B)False

Question 13

The process of adjustment to a new long-run equilibrium in a perfectly competitive industry is complete when

Accepted Answer

A) no firms want to enter or exit the industry. 
B) every firm has adjusted its production process to make the most efficient use of its resources. 
C) investors in the industry receive the standard economy-wide rate of return on their investments. 
D) All of the responses are correct. 
A) no firms want to enter or exit the industry. 
B) every firm has adjusted its production process to make the most efficient use of its resources. 
C) investors in the industry receive the standard economy-wide rate of return on their investments. 
D) All of the responses are correct.

In the long run, any firm may enter or leave a perfectly competitive market.

The short-run supply curve for a perfectly competitive firm is that portion of the MC curve above the AVC curve.

For a firm in a perfectly competitive market, its short-run supply curve is that portion of the MC curve above where it intersects with the average total cost curve.

A perfectly competitive firm can maximize profits by producing the quantity at which MR exceeds MC by the greatest amount.

Why doesn't a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?

The market for a perfectly competitive industry has an equilibrium price of $5 and the minimum average cost for the firms in this market is $3. In the long run, we would expect

Which of the following is closest to the economist's definition of perfect competition?

A perfectly competitive firm is a "price maker."

Under perfect competition, regarding short-run profit, a firm may find itself losing money. This is true because

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

A firm can stay in business while taking a loss in the short run as long as it covers its

As long as TVC

The process of adjustment to a new long-run equilibrium in a perfectly competitive industry is complete when

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Exam 10: The Firm and the Industry Under Perfect Competition

In the long run, any firm may enter or leave a perfectly competitive market.

The short-run supply curve for a perfectly competitive firm is that portion of the MC curve above the AVC curve.

For a firm in a perfectly competitive market, its short-run supply curve is that portion of the MC curve above where it intersects with the average total cost curve.

A perfectly competitive firm can maximize profits by producing the quantity at which MR exceeds MC by the greatest amount.

Why doesn't a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?

The market for a perfectly competitive industry has an equilibrium price of $5 and the minimum average cost for the firms in this market is $3. In the long run, we would expect

Which of the following is closest to the economist's definition of perfect competition?

A perfectly competitive firm is a "price maker."

Under perfect competition, regarding short-run profit, a firm may find itself losing money. This is true because

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

A firm can stay in business while taking a loss in the short run as long as it covers its

As long as TVC

The process of adjustment to a new long-run equilibrium in a perfectly competitive industry is complete when

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters