Question 1

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

Accepted Answer

A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost. 
A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost.

Question 2

A market in which many firms sell identical products is

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  only perfectly competition. 
D)  only monopolistic competition. 
E)  both perfect competition and monopolistic competition. 
A)  a monopoly. 
B)  an oligopoly. 
C)  only perfectly competition. 
D)  only monopolistic competition. 
E)  both perfect competition and monopolistic competition.

Question 3

The firm's over-riding objective is to

Accepted Answer

A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss. 
A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss.

Question 4

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Accepted Answer

A)  makes an economic profit because marginal revenue is equal to marginal cost at this output level. 
B)  should decrease his output to increase his profit. 
C)  is maximizing his profit and is making an economic profit. 
D)  should increase his output to increase his profit. 
E)  is not maximizing his profit but is making zero economic profit anyway. 
A)  makes an economic profit because marginal revenue is equal to marginal cost at this output level. 
B)  should decrease his output to increase his profit. 
C)  is maximizing his profit and is making an economic profit. 
D)  should increase his output to increase his profit. 
E)  is not maximizing his profit but is making zero economic profit anyway.

Question 5

Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50.If the price is $2 and the firm's marginal cost is $2,the firm should

Accepted Answer

A)  continue to produce, but produce more than 50. 
B)  continue to produce 50. 
C)  continue to produce, but produce less than 50. 
D)  shut down. 
E)  continue to operate, but to determine the amount of production needs more information than is given. 
A)  continue to produce, but produce more than 50. 
B)  continue to produce 50. 
C)  continue to produce, but produce less than 50. 
D)  shut down. 
E)  continue to operate, but to determine the amount of production needs more information than is given.

Question 6

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

Accepted Answer

No,the number of sellers is not the only

Question 7

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

Accepted Answer

A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC. 
A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC.

Question 8

A firm maximizes its profit by producing the amount of output such that

Accepted Answer

A)  marginal revenue equals marginal cost. 
B)  marginal revenue exceeds marginal cost by some amount. 
C)  marginal revenue is maximized. 
D)  marginal cost is minimized. 
E)  marginal revenue exceeds marginal cost by the maximum amount possible. 
A)  marginal revenue equals marginal cost. 
B)  marginal revenue exceeds marginal cost by some amount. 
C)  marginal revenue is maximized. 
D)  marginal cost is minimized. 
E)  marginal revenue exceeds marginal cost by the maximum amount possible.

Question 9

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market,the profit of the remaining firms ________; if some firms enter the market,the profit of each existing firm ________.

Accepted Answer

A)  decreases; is unchanged 
B)  increases; decreases 
C)  increases; is unchanged 
D)  is unchanged; is unchanged 
E)  decreases; increases 
A)  decreases; is unchanged 
B)  increases; decreases 
C)  increases; is unchanged 
D)  is unchanged; is unchanged 
E)  decreases; increases

Question 10

If perfectly competitive firms are making an economic profit,then

Accepted Answer

A)  the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B)  some firms will exit the market. 
C)  new firms will enter the market. 
D)  the market might be in a long-run equilibrium but not a short-run equilibrium. 
E)  the market cannot be in either a short-run or a long-run equilibrium. 
A)  the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B)  some firms will exit the market. 
C)  new firms will enter the market. 
D)  the market might be in a long-run equilibrium but not a short-run equilibrium. 
E)  the market cannot be in either a short-run or a long-run equilibrium.

Question 11

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

Accepted Answer

A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20 
A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20

Question 12

The figure above shows a firm's marginal revenue and marginal cost curves.
-Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

A)  is; incurring an economic loss 
B)  is; making a normal profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making a normal profit 
A)  is; incurring an economic loss 
B)  is; making a normal profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making a normal profit

Question 13

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

Accepted Answer

A)  market demand for syrup decreases. 
B)  marginal cost curve shifts downward. 
C)  market demand for syrup does not change. 
D)  market demand for syrup increases. 
E)  price of syrup rises. 
A)  market demand for syrup decreases. 
B)  marginal cost curve shifts downward. 
C)  market demand for syrup does not change. 
D)  market demand for syrup increases. 
E)  price of syrup rises.

Question 14

A permanent decrease in demand definitely

Accepted Answer

A)  shifts a firm's average total cost curve downward. 
B)  creates diseconomies for individual firms. 
C)  lowers the market price. 
D)  decreases the number of firms in the industry. 
E)  shifts a firm's average total cost curve upward. 
A)  shifts a firm's average total cost curve downward. 
B)  creates diseconomies for individual firms. 
C)  lowers the market price. 
D)  decreases the number of firms in the industry. 
E)  shifts a firm's average total cost curve upward.

Question 15

The above figure shows some a firm's cost curves and its marginal revenue curve.
-The firm in the figure above has a total revenue equal to ________.

Accepted Answer

A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed. 
A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed.

Question 16

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit,the firm

Accepted Answer

A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost. 
A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost.

Question 17

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC,so his total cost of production equals

Accepted Answer

A)  $0 because Bill shuts down. 
B)  more than $0 and less than $1,200 per week. 
C)  more than $1,200 and less than $1,400 per week. 
D)  more than $1,400 per week and less than $1,800 per week. 
E)  more than $1,800 per week. 
A)  $0 because Bill shuts down. 
B)  more than $0 and less than $1,200 per week. 
C)  more than $1,200 and less than $1,400 per week. 
D)  more than $1,400 per week and less than $1,800 per week. 
E)  more than $1,800 per week.

Question 18

The figure above shows a firm's marginal revenue and marginal cost curves.
-Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

Accepted Answer

A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 19

-Bill owns a lawn-care company in Windermere,Florida,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.If Bill's average total cost curve is ATC,his total economic ________ equals ________.

Accepted Answer

A)  loss; $800 per week 
B)  profit; $1,280 per week 
C)  profit; $480 per week 
D)  loss; $1,280 per week 
E)  profit; $32 per week 
A)  loss; $800 per week 
B)  profit; $1,280 per week 
C)  profit; $480 per week 
D)  loss; $1,280 per week 
E)  profit; $32 per week

Question 20

In which market structure are there a small number of firms competing?

Accepted Answer

A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly 
A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

A market in which many firms sell identical products is

The firm's over-riding objective is to

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50.If the price is $2 and the firm's marginal cost is $2,the firm should

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

A firm maximizes its profit by producing the amount of output such that

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market,the profit of the remaining firms ; if some firms enter the market,the profit of each existing firm .

If perfectly competitive firms are making an economic profit,then

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

The figure above shows a firm's marginal revenue and marginal cost curves. -Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

A permanent decrease in demand definitely

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit,the firm

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC,so his total cost of production equals

The figure above shows a firm's marginal revenue and marginal cost curves. -Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

-Bill owns a lawn-care company in Windermere,Florida,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.If Bill's average total cost curve is ATC,his total economic equals .

In which market structure are there a small number of firms competing?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

A market in which many firms sell identical products is

The firm's over-riding objective is to

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50.If the price is $2 and the firm's marginal cost is $2,the firm should

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

A firm maximizes its profit by producing the amount of output such that

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market,the profit of the remaining firms ________; if some firms enter the market,the profit of each existing firm ________.

If perfectly competitive firms are making an economic profit,then

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

The figure above shows a firm's marginal revenue and marginal cost curves. -Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

A permanent decrease in demand definitely

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit,the firm

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC,so his total cost of production equals

The figure above shows a firm's marginal revenue and marginal cost curves. -Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

-Bill owns a lawn-care company in Windermere,Florida,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.If Bill's average total cost curve is ATC,his total economic ________ equals ________.

In which market structure are there a small number of firms competing?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market,the profit of the remaining firms ; if some firms enter the market,the profit of each existing firm .

The figure above shows a firm's marginal revenue and marginal cost curves. -Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .

-Bill owns a lawn-care company in Windermere,Florida,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.If Bill's average total cost curve is ATC,his total economic equals .