Question 1

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

Accepted Answer

A)  an increase in the market price 
B)  a decrease in average fixed costs 
C)  a decrease in marginal cost 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  an increase in the market price 
B)  a decrease in average fixed costs 
C)  a decrease in marginal cost 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 2

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

Accepted Answer

A)  some, but fewer than he would at a price of $4 
B)  more than he would at a price of $4 
C)  just as many as he would at a price of $4 
D)  none 
E)  More information is needed about the prices charged by the other wheat farmers. 
A)  some, but fewer than he would at a price of $4 
B)  more than he would at a price of $4 
C)  just as many as he would at a price of $4 
D)  none 
E)  More information is needed about the prices charged by the other wheat farmers.

Question 3

-The above figure shows a perfectly competitive firm.If the market price is $5,the firm

Accepted Answer

A)  is making an economic profit. 
B)  is making zero economic profit. 
C)  will immediately shut down. 
D)  will not shut down. 
E)  might shut down but more information is needed about the AVC. 
A)  is making an economic profit. 
B)  is making zero economic profit. 
C)  will immediately shut down. 
D)  will not shut down. 
E)  might shut down but more information is needed about the AVC.

Question 4

In the long run,a perfectly competitive firm will

Accepted Answer

A)  be able to make an economic profit. 
B)  produce but incur an economic loss. 
C)  make zero economic profit. 
D)  not produce and will incur an economic loss equal to its total fixed cost. 
E)  not produce but not incur an economic loss. 
A)  be able to make an economic profit. 
B)  produce but incur an economic loss. 
C)  make zero economic profit. 
D)  not produce and will incur an economic loss equal to its total fixed cost. 
E)  not produce but not incur an economic loss.

Question 5

Which of the following is true if a firm shuts down?
i.The price is less than minimum average variable cost.
ii.The firm is able to avoid an economic loss.
iii.The firm incurs a loss equal to its total variable cost.

Accepted Answer

A)  i only 
B)  i and ii 
C)  i and iii 
D)  iii only 
E)  ii only 
A)  i only 
B)  i and ii 
C)  i and iii 
D)  iii only 
E)  ii only

Question 6

A market is ________ when a small number of firms compete.

Accepted Answer

A)  a monopoly 
B)  perfectly competitive 
C)  monopolistically competitive 
D)  an oligopoly 
E)  either monopolistically competitive or an oligopoly 
A)  a monopoly 
B)  perfectly competitive 
C)  monopolistically competitive 
D)  an oligopoly 
E)  either monopolistically competitive or an oligopoly

Question 7

In which market structure do firms exist in very large numbers,each firm produces an identical product,and there is freedom of entry and exit?

Accepted Answer

A)  monopoly 
B)  oligopoly 
C)  only perfect competition 
D)  only monopolistic competition 
E)  both perfect competition and monopolistic competition 
A)  monopoly 
B)  oligopoly 
C)  only perfect competition 
D)  only monopolistic competition 
E)  both perfect competition and monopolistic competition

Question 8

The corn market is perfectly competitive,with thousands of corn farmers.In the 2000s,the price of corn soared so that new farmers entered the corn market.Initially,entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

Accepted Answer

A)  increased; made an even greater economic profit than initially 
B)  decreased; made zero economic profit 
C)  increased; made zero economic profit 
D)  decreased; incurred an economic loss 
E)  increased; made an economic profit 
A)  increased; made an even greater economic profit than initially 
B)  decreased; made zero economic profit 
C)  increased; made zero economic profit 
D)  decreased; incurred an economic loss 
E)  increased; made an economic profit

Question 9

As a perfectly competitive firm produces more and more of a good,its economic profit

Accepted Answer

A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change. 
A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change.

Question 10

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

Accepted Answer

A)  lower price, economic losses by rutabaga farmers, and entry into the market. 
B)  lower price, economic losses by rutabaga farmers, and exit from the market. 
C)  higher price, economic profits for rutabaga farmers, and entry into the market. 
D)  higher price, economic losses by rutabaga farmers, and exit from the market. 
E)  lower price, economic profits for rutabaga farmers, and entry into the market. 
A)  lower price, economic losses by rutabaga farmers, and entry into the market. 
B)  lower price, economic losses by rutabaga farmers, and exit from the market. 
C)  higher price, economic profits for rutabaga farmers, and entry into the market. 
D)  higher price, economic losses by rutabaga farmers, and exit from the market. 
E)  lower price, economic profits for rutabaga farmers, and entry into the market.

Question 11

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure ________ shows a firm maximizing profit in the short run because it produces ________ units and makes an economic profit of ________.

Accepted Answer

A)  A; 100; $2 per unit 
B)  A; 90; $3 per unit 
C)  B; 100; $0 per unit 
D)  C; 100; $3 per unit 
E)  C; 110; $2 per unit 
A)  A; 100; $2 per unit 
B)  A; 90; $3 per unit 
C)  B; 100; $0 per unit 
D)  C; 100; $3 per unit 
E)  C; 110; $2 per unit

Question 12

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is false.A perfe

Question 13

In the short run,a perfectly competitive firm can experience which of the following?
i.an economic profit
ii.an economic loss but it continues to stay open
iii.an economic loss equal to its total fixed cost when it shuts down

Accepted Answer

A)  only i 
B)  i and ii 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii 
A)  only i 
B)  i and ii 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii

Question 14

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit,inc

Question 15

A perfectly competitive firm maximizes its profit by producing at the point where

Accepted Answer

A)  total revenue equals total cost. 
B)  marginal revenue is equal to marginal cost. 
C)  total revenue is equal to marginal revenue. 
D)  total cost is at its minimum. 
E)  total revenue is at its maximum. 
A)  total revenue equals total cost. 
B)  marginal revenue is equal to marginal cost. 
C)  total revenue is equal to marginal revenue. 
D)  total cost is at its minimum. 
E)  total revenue is at its maximum.

Question 16

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

Because the firms are incurring an econo

Question 17

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

Accepted Answer

In the short run,a perfectly competitive

Question 18

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Accepted Answer

A)  downward sloping. 
B)  a horizontal line. 
C)  upward sloping. 
D)  U-shaped. 
E)  undefined because the firm is perfectly competitive. 
A)  downward sloping. 
B)  a horizontal line. 
C)  upward sloping. 
D)  U-shaped. 
E)  undefined because the firm is perfectly competitive.

Question 19

Consider a perfectly competitive market experiencing good times.In the short run,the equilibrium price will ________ and firms will earn a(n)________.

Accepted Answer

A)  increase; economic profit as the new price exceeds average total cost 
B)  increase; normal profit as the new price exceeds average total cost 
C)  decrease; economic loss as new firms enter the industry 
D)  decrease; economic profit as firms exit the industry 
E)  may increase or decrease; normal profit depending on their costs 
A)  increase; economic profit as the new price exceeds average total cost 
B)  increase; normal profit as the new price exceeds average total cost 
C)  decrease; economic loss as new firms enter the industry 
D)  decrease; economic profit as firms exit the industry 
E)  may increase or decrease; normal profit depending on their costs

Question 20

In perfect competition,marginal revenue

Accepted Answer

A)  increases as more is sold. 
B)  decreases as more is sold. 
C)  is equal to the market price. 
D)  is zero. 
E)  is always greater than marginal cost. 
A)  increases as more is sold. 
B)  decreases as more is sold. 
C)  is equal to the market price. 
D)  is zero. 
E)  is always greater than marginal cost.

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

-The above figure shows a perfectly competitive firm.If the market price is $5,the firm

In the long run,a perfectly competitive firm will

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

A market is ________ when a small number of firms compete.

In which market structure do firms exist in very large numbers,each firm produces an identical product,and there is freedom of entry and exit?

The corn market is perfectly competitive,with thousands of corn farmers.In the 2000s,the price of corn soared so that new farmers entered the corn market.Initially,entry the economic profit of the initial corn farmers and in the long run the initial corn farmers .

As a perfectly competitive firm produces more and more of a good,its economic profit

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure shows a firm maximizing profit in the short run because it produces units and makes an economic profit of .

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

In the short run,a perfectly competitive firm can experience which of the following? i.an economic profit ii.an economic loss but it continues to stay open iii.an economic loss equal to its total fixed cost when it shuts down

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

A perfectly competitive firm maximizes its profit by producing at the point where

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Consider a perfectly competitive market experiencing good times.In the short run,the equilibrium price will and firms will earn a(n).

In perfect competition,marginal revenue

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

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

-The above figure shows a perfectly competitive firm.If the market price is $5,the firm

In the long run,a perfectly competitive firm will

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

A market is ________ when a small number of firms compete.

In which market structure do firms exist in very large numbers,each firm produces an identical product,and there is freedom of entry and exit?

The corn market is perfectly competitive,with thousands of corn farmers.In the 2000s,the price of corn soared so that new farmers entered the corn market.Initially,entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

As a perfectly competitive firm produces more and more of a good,its economic profit

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure ________ shows a firm maximizing profit in the short run because it produces ________ units and makes an economic profit of ________.

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

In the short run,a perfectly competitive firm can experience which of the following? i.an economic profit ii.an economic loss but it continues to stay open iii.an economic loss equal to its total fixed cost when it shuts down

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

A perfectly competitive firm maximizes its profit by producing at the point where

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Consider a perfectly competitive market experiencing good times.In the short run,the equilibrium price will ________ and firms will earn a(n)________.

In perfect competition,marginal revenue

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

The corn market is perfectly competitive,with thousands of corn farmers.In the 2000s,the price of corn soared so that new farmers entered the corn market.Initially,entry the economic profit of the initial corn farmers and in the long run the initial corn farmers .

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure shows a firm maximizing profit in the short run because it produces units and makes an economic profit of .

Consider a perfectly competitive market experiencing good times.In the short run,the equilibrium price will and firms will earn a(n).