Question 1

Figure 10-5 ​
 
In Figure 10-5, points which lie on the firm's short-run supply curve are

Accepted Answer

A) A, B, C. 
B) C, D, H. 
C) F, E, G. 
D) A, C, H. 
A) A, B, C. 
B) C, D, H. 
C) F, E, G. 
D) A, C, H.

Question 2

In perfect competition, an increase in the firm's fixed costs lead to

Accepted Answer

A) a drop in the firm's output. 
B) an increase in the firm's output. 
C) an increase in its total costs. 
D) a drop in industry output. 
A) a drop in the firm's output. 
B) an increase in the firm's output. 
C) an increase in its total costs. 
D) a drop in industry output.

Question 3

At a firm's profit-maximizing level of output, its price is $200 and its short-run average total cost is $225. The firm

Accepted Answer

A) has a profit of $25 per unit of output. 
B) should shut down if its short-run average fixed cost is less than $25. 
C) has a loss of $100 per unit of output. 
D) should shut down if its short-run average variable cost exceeds $25. 
A) has a profit of $25 per unit of output. 
B) should shut down if its short-run average fixed cost is less than $25. 
C) has a loss of $100 per unit of output. 
D) should shut down if its short-run average variable cost exceeds $25.

Question 4

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 5

A firm will not choose to produce if total variable costs exceed total revenue.

Accepted Answer

A) True 
 B)False

Question 6

In the short run, perfectly competitive firms will determine whether to continue producing the current output, reduce output, or increase output based on the relationship between

Accepted Answer

A) price and average cost. 
B) price and marginal cost. 
C) marginal revenue and average cost. 
D) average revenue and average cost. 
A) price and average cost. 
B) price and marginal cost. 
C) marginal revenue and average cost. 
D) average revenue and average cost.

Question 7

A firm's minimum AC is $10, its minimum AVC $7. Show this firm's short-run supply curve, explaining how you obtained it.

Accepted Answer

Draw a U-shaped AC and AVC, with Q at mi

Question 8

A perfectly competitive firm should continue to expand output until

Accepted Answer

A) total revenue exceeds total costs. 
B) total revenue exceeds variable costs. 
C) marginal revenue equals marginal costs. 
D) average revenue equals variable costs. 
A) total revenue exceeds total costs. 
B) total revenue exceeds variable costs. 
C) marginal revenue equals marginal costs. 
D) average revenue equals variable costs.

Question 9

There are currently 1,000 firms in a competitive industry. Minimum long-run average cost is $80 and price $100. Explain what will happen to price, profit, and the number of firms in this industry over time.

Accepted Answer

Price exceeds minimum long-run average c

Question 10

Table 10-2   Refer to Table 10-2. Which firm is better off staying in business in the short run?

Accepted Answer

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

Question 11

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 12

Using only marginal revenue and marginal cost, we can determine whether a firm is incurring a profit or a loss.

Accepted Answer

A) True 
 B)False

Question 13

In perfect competition, a firm's marginal revenue is the same as the demand curve at high levels of output.

Accepted Answer

A) True 
 B)False

Question 14

Once a firm's marginal revenue curve is known, the output level can be determined.

Accepted Answer

A) True 
 B)False

Question 15

Figure 10-3 ​
 
In Figure 10-3, the profit maximizing firm will operate at a level of

Accepted Answer

A) OJ. 
B) OG. 
C) OI. 
D) OH. 
A) OJ. 
B) OG. 
C) OI. 
D) OH.

Question 16

The demand curve of a perfectly competitive firm is vertical.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Figure 10-7 ​
 
In Figure 10-7, through which point must a horizontal demand curve pass to yield a long-run equilibrium?

Accepted Answer

A) A 
B) B 
C) C 
D) All of these are correct. 
A) A 
B) B 
C) C 
D) All of these are correct.

Question 19

A market

Accepted Answer

A) may be an organized exchange. 
B) refers to a set of sellers and buyers whose actions affect a commodity's price. 
C) is that area in which buyers and sellers compete to affect a product's price. 
D) All of the responses are correct. 
A) may be an organized exchange. 
B) refers to a set of sellers and buyers whose actions affect a commodity's price. 
C) is that area in which buyers and sellers compete to affect a product's price. 
D) All of the responses are correct.

Question 20

The opportunity cost of a given investment is the potential earnings forfeited by tying up money in the investment.

Accepted Answer

A) True 
 B)False

Exam 10: The Firm and the Industry Under Perfect Competition

Figure 10-5 ​ In Figure 10-5, points which lie on the firm's short-run supply curve are

In perfect competition, an increase in the firm's fixed costs lead to

At a firm's profit-maximizing level of output, its price is $200 and its short-run average total cost is $225. The firm

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 ____.

A firm will not choose to produce if total variable costs exceed total revenue.

In the short run, perfectly competitive firms will determine whether to continue producing the current output, reduce output, or increase output based on the relationship between

A firm's minimum AC is $10, its minimum AVC $7. Show this firm's short-run supply curve, explaining how you obtained it.

A perfectly competitive firm should continue to expand output until

There are currently 1,000 firms in a competitive industry. Minimum long-run average cost is $80 and price $100. Explain what will happen to price, profit, and the number of firms in this industry over time.

Table 10-2 Refer to Table 10-2. Which firm is better off staying in business in the short run?

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

Using only marginal revenue and marginal cost, we can determine whether a firm is incurring a profit or a loss.

In perfect competition, a firm's marginal revenue is the same as the demand curve at high levels of output.

Once a firm's marginal revenue curve is known, the output level can be determined.

Figure 10-3 ​ In Figure 10-3, the profit maximizing firm will operate at a level of

The demand curve of a perfectly competitive firm is vertical.

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

Figure 10-7 ​ In Figure 10-7, through which point must a horizontal demand curve pass to yield a long-run equilibrium?

A market

The opportunity cost of a given investment is the potential earnings forfeited by tying up money in the investment.

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

Figure 10-5 In Figure 10-5, points which lie on the firm's short-run supply curve are

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 10-3 In Figure 10-3, the profit maximizing firm will operate at a level of

Figure 10-7 In Figure 10-7, through which point must a horizontal demand curve pass to yield a long-run equilibrium?